Vitrolife: Solid organic growth, but should slow in '23 - ABG

Better organic growth, less impressive margins
'23e-'24e EBIT cut 3%
Trading at 34x '23e EV/EBITDA vs. pre-pandemic level of 32x


Strong organic growth, but lower margins

Vitrolife showed impressive organic growth, as all regions but the Americas performed better than we expected. In EMEA, Technology sales stood out with 25% organic growth. In Japan & Pacific, Consumables (up 27% organically) and Technology (up 46% organically) impressed on the back of new reimbursement in Japan. However, Consumables organic growth in EMEA (+1%) and Americas (-1%) continues to signal a procedure slowdown in the West that will likely continue into ‘23 as consumers grapple with tighter finances. While near-term growth should slow, we are not concerned given that periods of lower growth in cycles have been temporary. Postponed cycles likely build a backlog of customers that will mostly return when they are able to, supporting ~13% organic Consumables growth in '24e. Margins were on the low side, with gross margins in Americas deteriorating a further 2pp q-o-q. This, combined with a 26% q-o-q increase in EMEA sales expenses, contributed to a 6% EBIT miss vs. ABGSCe.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/Vitrolife/Equity-research/2023/2/vitrolife---solid-organic-growth-but-should-slow-in-23/