Siegfried Holding shares jump on strong first-half results

Investing.com -- Shares of Siegfried Holding (SIX:SFZN ) jumped following the company's results in the first half of 2024, beating market expectations.

At 5:15 am (0915 GMT), Siegfried Holding was trading 7.2% higher at CHF 1,076.

Siegfried reported group revenue of CHF 620 million for the first half of 2024, representing a 3.5% growth in local currency, slightly ahead of Stifel's forecast of CHF 608 million. 

This growth was primarily driven by the Drug Product segment, which exceeded expectations despite anticipated headwinds from pharmaceutical destocking and portfolio management adjustments.

The company's profitability also showed notable improvement, with an adjusted EBITDA of CHF 132 million, resulting in a 21.3% margin. This slightly surpassed consensus estimates, indicating strong operational execution and effective cost management. 

Stifel analysts noted that Siegfried's EBITDA margin could see a further 100 basis points improvement in the second half of the year, driven by seasonality and ongoing operational efficiencies.

Siegfried's strong performance in the first half has reinforced its guidance for the full year 2024, with expectations for low single-digit local currency growth and a core EBITDA margin at or above the 2023 level. 

“FY24 outlook confirmed, our impression of the H1 results is that it gives more confidence in the guide, setting a lower bar for the typically weighted H2 to reach the guide, especially at EBITDA,” the analysts said. 

The company's free cash flow (FCF) also saw a significant year-over-year increase of 260%, supported by improvements in net working capital. Capital expenditures (Capex) were reported at the lower end of guidance for the first half, with expectations of higher spending in the second half of 2024.

Stifel analysts maintained a "buy" rating on Siegfried with a price target of CHF 1,170, representing a 16.5% upside from the current share price of CHF 1,004.

Stifel's positive outlook is based on Siegfried's strong market position, particularly in the contract development and manufacturing organization (CDMO) sector, where it continues to expand its product portfolio and enhance operational efficiency. 

Source: Investing.com