We expect Vitrolife to report Q1’22e sales of SEK 753m, +99% y-o-y (org. 4%, FX 5%, M&A 89%). We believe that developed markets have now normalised, with North America and Europe back to regular growth. However, travel restrictions and border closures following COVID-19 outbreaks in China and nearby markets (e.g. Thailand and Malaysia) in the quarter are likely holding back the recovery of the lagging IVF tourism demand from China. In addition to a weaker Asia (Q1’22e -5% org. y-o-y), we see a tougher comp for Technology (Q1’22e: -13% y-o-y) contributing to weaker org. growth at 4%. Q1 will be the first full quarter for the new genetic services division (Igenomix), which we expect to contribute with sales of SEK 331m. We also expect the launch of Genomics tests in APAC (acquired from Illumina in Q4) to contribute with ~SEK 8m, for total 89% M&A growth in Q1. We forecast adj. EBITDA of SEK 243m for a margin of 31.6% (-11.4pp y-o-y), which is impacted by mix-effects from consolidating Igenomix (FY’21 EBITDA margin of 23%).
Estimate changes
We lower our 2022 sales estimate by 2% and EBITDA by 3% due to the slower recovery in Asia and a lower contribution from Russia (2% of FY’21 pro forma sales). Vitrolife has not ceased its operations in Russia (a decision that is in line with similar suppliers of medical equipment), but we believe the current situation could disrupt the normal business environment.
Double-digit organic growth, valuation back to historical avg.
Vitrolife enjoys a strong market position in the niche IVF market, with exposure to long-term growth trends such as increasing female workforce participation and a growing middle class. After growing 85% in 2022 (M&A: 76%), we believe Vitrolife could grow >10% organically in the mid-term. The share is down -45% YTD and is trading at ’22e-’23e EV/EBITDA of 43-37x, vs. ...
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