Straumann stock rallies on upbeat results

Investing.com -- Shares of Straumann (SIX:STMN ) surged on Wednesday after it reported its second-quarter results, posting a solid performance that exceeded expectations in several key areas. 

Straumann surged 14.8% to CHF 127.10 at 5:01 am (0901 GMT).

The company's sales for the quarter reached CHF 1,273 million, aligning closely with the consensus estimate of CHF 1,300 million. 

However, the standout figures were the 14.8% organic revenue growth and a notable improvement in EBIT margin guidance, which drove the stock’s  rise.

Straumann's organic revenue growth of 14.8% for 2Q significantly surpassed the forecasted growth rates of 9% by consensus and 9.7% by Stifel's estimates. 

This robust performance was further bolstered by an unexpected yet favorable adjustment in EBIT margin guidance, now projected between 27-28%, up from the previous ~26%. The revision comes in light of the company's sale of DrSmile, which was finalized in August. 

“DrSmile has now (as per August) been sold in an all-stock transaction to Impress group for a 20% minority stake, removing the residual overhang from the direct-to-consumer headwind as per the majority of 3Q,” said analysts at Stifel in a note. 

The regional breakdown shows a strong performance in EMEA, with double-digit growth of 12.4%, even after excluding DrSmile. North America met expectations, driven by market share gains in the premium segment and positive uptake of new products like iEXCEL. 

APAC outperformed with a 12% increase, largely driven by premium brands in China, although the comparatives were influenced by prior year effects. LATAM continued its double-digit growth trend, with Brazil showing significant market share gains and an expanding sales operation, particularly in Costa Rica.

Stifel’s target price for Straumann is based on a discounted cash flow (DCF) valuation, incorporating a 10-year forecast and a terminal value. The WACC is set at 6.6%, reflecting a stable risk-free rate of 2.5%, a market risk premium of 6.0%, and a beta of 0.9. T

The terminal growth rate is projected at 3.5%. While potential economic downturns could impact market growth rates, Straumann’s diversified product portfolio and expanded addressable market position it well to weather economic challenges. 

The company’s broad product range and strong global distribution base are expected to drive sustained growth, particularly in dental implants and clear aligners.

Source: Investing.com