Boule Diagnostics: Soft Q2 on lower sales and gross margin - ABG

- 25% miss on adj EBIT
- Lower on sales and weaker gross margin
- Estimates likely down 5-8% on adj. EBIT

Q2 results
Net sales came at SEK 137m (-6% vs. ABGSCe 146.4m) with organic growth of -3.6% (ABGSCe +3.3%). The gross margin was 43.1% (ABGSCe 45.5%). Q2 adj. EBIT of SEK 9.9m (-25% vs. ABGSCe 13.2m), adjusted for restructuring costs of 8.5m in Q2 (ABGSCe 0m). The miss on EBIT was driven by lower sales and lower gross margin than expected and marginally higher opex. The negative deviation on sales was mainly related to sales of instrument sales which came in 19% below expectations. On a regional basis Eastern Europe and Africa/Middle East did well, but Asia was weak, 42% below expectations. No comment from management with regards the upcoming launch of the 5-part system.

Outlook and estimates
Boule Diagnostics do not have specific targets for 2024, but keeps its long-term financial targets unchanged. The new CEO is talking about improving margins and to accelerate growth. Based on the deviation, we expect to revise down our full year '24e adj. EBIT by 5-8% following the Q2 report.

Share price view
The report was weaker than expected and is likely to trigger negative estimate revisions. The stock is down ~9% YTD but has been realtviely flat going into the report, +25 over the past 5 days. We expect the come down 5-8% on the back of the soft Q2 results and expected negative earnings revisions.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/boule-diagnostics/Equity-research/2024/7/boule-diagnostics---soft-q2-on-lower-sales-and-gross-margin/