The revised strategic focus means Bactiguard will stop selling and terminate its own product business, with the exception of the profitable wound management segment. This is a major strategic shift for the company.
Bactiguard’s recently updated financial targets are to have annual net sales in excess of SEK1bn and EBITDA of SEK500m by year-end 2028. However, Bactiguard has a history of not delivering on its targets and we believe the new targets seem ambitious and they are also heavily dependent on the timing of Zimmer Biomet’s approval in US and how aggressively and broadly it plans to roll out Bactiguard’s coating on its various orthopaedic products. However, even if our more cautious approach on the timing of Zimmer Biomet’s US launch leaves our estimates well below the company’s official targets, we see potential for sales to increase by 150% in the next five years to about SEK500m, with a 40–45% EBITA margin.
In valuing the company, we have to consider that sales and earnings are heavily dependent on licence partners’ launch plans and Bactiguard’s ability to sign new deals. A new interim agreement with BD was signed on 14 December, which is a first early sign that the new strategy might be playing out. Based on a blended valuation approach, our fair value range is SEK70–90 per share.
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