Bactiguard: Encouraging BIP sales growth in Q2 - SEB
BIP product sales showed solid growth in Q2
Bactiguard’s Q2 results were strong with revenues up by 46% y/y, and EBITDA of SEK 10.5m (margin of 21.8%; up 500bp y/y). Whilst licence revenues from BD showed a shortfall (negatively affected by COVID-19), sales of Bactiguard’s own BIP portfolio was strong, which is encouraging, in our view. We expect continued strong growth of Bactiguard’s BIP product portfolio, with sales contribution from Well Lead after two consecutive quarters without any orders.
Several triggers lined up for H2
We believe H2 will show intensified news flow, including potential for further licence agreements in orthopaedics, continued roll-out of Hydrocyn Aqua, and updated financial targets to reflect the acquisition of Vigilenz. We also expect Zimmer Biomet to file 510(k) for Bactiguard coated trauma implants by year-end 2020. In addition, a potential earlier than expected launch in the EU based on the CE-mark received in December 2018 is possible and represents upside to our current 2020 estimates as we cautiously assume sales in EU in 2021.
Revised valuation range of SEK 160-184 per share
After Q2, we lift our 2020-22 EBITDA estimates by 6-10%, which is due to a more positive stance on Bactiguard’s gross margin. As a result, we raise our valuation range to SEK 160-184 per share from SEK 145-168. In addition, due to the lumpiness of Bactiguard’s licence business, we provide a scenario analysis with various 2021E EBITDA and forward-looking valuation multiples.
https://research.sebgroup.com/pdf/Bactiguard140820c.pdf
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