Company Reports

Lonza has been a dominant player in contract development and manufacturing for decades. We think its outlook is bright, especially as drug manufacturing becomes more complex, with biologics and specialized modalities like cell and gene therapies playing larger roles in the overall mix.

Lonza reported sales of CHF 3.4 billion in the first half of 2026, up 16% at constant exchange rates from the prior-year period. Management maintained its 2026 outlook of 11%-12% sales growth, but it raised the core EBITDA margin outlook to 33%-34%. Shares fell nearly 5% on July 22.

Lonza provided a first-quarter qualitative business update, reporting strong performance across its contract development and manufacturing organization business, in line with its 2026 outlook of 11%-12% sales growth at constant exchange rates and a core EBITDA margin above 32%.

Lonza will sell its Capsules & Health Ingredients business to UK-based investment firm Lone Star Funds for $2.2 billion (CHF 1.7 billion). This unit produces products for supplements, nutraceuticals, and over-the-counter markets. The transaction is expected to close in the second half of 2026.

Lonza reported CHF 6.5 billion in 2025 sales, up 21.7% year over year at constant exchange rates. For 2026, Lonza expects 11%-12% constant exchange rate sales growth and core EBITDA margin above 32%, with a foreign exchange headwind of about 2% from the weakening US dollar.

Lonza has been a dominant player in contract development and manufacturing for decades. We think its outlook is bright, especially as drug manufacturing becomes more complex, with biologics and specialized modalities like cell and gene therapies playing larger roles in the overall mix.

Lonza provided a third-quarter qualitative update and reaffirmed its contract development and manufacturing organization outlook for 2025 of 20%-21% sales growth at constant exchange rates and a core EBITDA margin of 30%-31%.

Lonza has been a dominant player in contract development and manufacturing for decades. We think its outlook is bright, especially as drug manufacturing becomes more complex, with biologics and cell and gene therapies playing larger roles in the overall mix.

Lonza delivered 19% constant-currency sales growth and core EBITDA margin of nearly 30% in the first half of 2025.

Narrow-Moat Lonza restructured its contract development and manufacturing organization business to provide a more simplified model by shifting it from three divisions with nine underlying business units to three CDMO business platforms: integrated biologics, advanced synthesis, and specialized modalities. The capsules and health ingredients business will continue to operate in its existing structure, but management intends to exit this business and evolve into a pure-play CDMO. This simplified organizational structure should allow management to improve its execution capabilities in each business platform. We maintain our fair value estimate of CHF 550 per share, and we view shares as fairly valued.

Narrow-moat Lonza delivered solid performance in its core contract development and manufacturing organization business, but softer results from its capsules and health ingredients division, which faced market headwinds. Lonza's sales for 2024 were CHF 6.6 billion, which is virtually flat compared to the prior year at constant exchange rates. Sales were impacted by the loss of covid-related mRNA revenue from the termination of Moderna’s contract. However, after adjusting for this impact, underlying sales grew around 7% at constant exchange rates. Lonza's narrow-moat is underscored by the resilience of its CDMO business, which continues to perform well despite the loss of covid-related sales. We think Lonza is well positioned to deliver strong performance, particularly in the fast-growing biologics and cell and gene divisions. After updating our model, we slightly raised our fair value estimate to CHF 550 per share from CHF 530.

Lonza Group has been a dominant player in the contract development and manufacturing space for decades. We think the outlook for Lonza looks bright, especially as drug manufacturing becomes more complex with biologics and cell and gene therapies playing larger roles in the overall mix.

Narrow-moat Lonza provided a third-quarter qualitative update, and the company is tracking our 2024 expectations. We forecast flat sales growth in 2024, which reflects the impact of Moderna's canceled contract for its covid vaccine. Lonza’s capsules and health ingredients division, which accounted for 17% of 2023 sales, has experienced soft performance this year in line with the market due to continued destocking of pharma hard capsules. Despite these near-term challenges, we maintain our positive long-term outlook for Lonza thanks to strong demand for outsourced manufacturing of biologics and cell and gene therapies. We maintain our fair value estimate of CHF 530 per share and view the stock as fairly valued, currently trading in 3-star territory.

Lonza Group has been a dominant player in the contract development and manufacturing space for decades. We think the outlook for Lonza looks bright, especially as drug manufacturing becomes more complex with biologics and cell and gene therapies playing larger roles in the overall mix.

Lonza reported half-yearly results in line with our expectations and management reiterated its outlook for 2024, which includes flat sales growth at constant currency and a core EBITDA margin in the high 20s. The flat sales growth reflects the impact of Moderna’s canceled contract for its covid vaccine. Lonza's biologics segment, which accounted for 56% of total half-yearly revenue, reported sales growth of 7.3% compared with the first half of 2023 thanks to strong commercial demand. Excluding covid-related sales in the first half of 2023, sales growth for the first half of 2024 would have been in the midteens compared with the prior year. Additionally, the biologics segment's core EBITDA margin of 34.8% was supported by a favorable product mix and strong operational performance, partially offset by ramp-up costs from new manufacturing investments. Investors reacted favorably to these results and sent the stock up 7%.

Narrow-moat Lonza provided a first-quarter 2024 qualitative update, and the company is tracking our expectations. Management will release additional details when it reports its half-yearly results in July. We continue to forecast flat sales growth in 2024, which reflects the impact of Moderna's canceled contract for its covid vaccine. However, we maintain our positive long-term outlook for Lonza thanks to strong demand for outsourced manufacturing of biologics and cell and gene therapies. We maintain our fair value estimate of CHF 530 per share, and we view the stock as fairly valued, currently trading in 3-star territory.

Lonza ended 2023 with solid sales of CHF 6.7 billion, representing growth of 7.9% year over year. Strong performance in the biologics and small molecules segments accounted for more than 70% of the company’s revenue and each segment delivered impressive margins of more than 30%. We maintain our fair value estimate of CHF 530 per share, and we view the stock as undervalued, currently trading in 4-star territory about 19% below our fair value estimate.

We have adjusted our mid-term forecasts to account for reduced COVID-19-related revenue due to lower post-pandemic demand, as Moderna canceled its contract with Lonza to produce its mRNA COVID-19 vaccine. As a result, we have lowered our fair value estimate to CHF 530 per share. However, we maintain our positive long-term outlook for Lonza thanks to strong demand for manufacturing biologics and cell and gene therapies. We view the stock as trading at an attractive entry point in 5-star territory about 33% below our fair value estimate.

Lonza Group has been a dominant player in the contract development and manufacturing space for decades. We think the outlook for Lonza looks bright, especially as drug manufacturing becomes more complex with biologics and cell and gene therapies playing larger roles in the overall mix.

Lonza has announced that its CEO, Pierre-Alain Ruffieux, will leave the company at the end of September by mutual agreement. Chairman Albert Baehny will take over as CEO on an interim basis until a permanent successor is appointed. Baehny has served as the Chairman of Lonza since 2018. Investors were spooked by this news and sent the stock down nearly 15%. The stock is currently trading at a 32% discount to our fair value estimate of CHF 620 per share, representing an attractive entry point for long-term investors with a high degree of risk tolerance.