Download PDF

1. Company Snapshot

1.a. Company Description

Lonza Group Ltd supplies products and services to the pharmaceutical, biotech, and nutrition markets in Switzerland and internationally.It operates through Biologics, Small Molecules, Cell and Gene, and Capsules and Health Ingredients divisions.The Biologics division engages in the contract development and manufacturing services for biopharmaceuticals.


The Small Molecules division operates as an integrated development and manufacturing service provider for small molecule drug substances and their intermediates.The Cell and Gene division develops technologies and platforms that industrialize the manufacturing processes and production of cell and gene therapies.It also offers contract development and manufacturing services for a range of allogeneic and autologous cell therapies, and exosome-based therapies, as well as viral vector gene therapies.


This segment provides specialty raw materials and enabling technology solutions in cell and gene therapy, injectable drugs, vaccines, and bio-manufacturing markets.The Capsules and Health Ingredients division offers capsules, dosage form solutions, and health ingredients for pharmaceutical and nutraceutical customers.Lonza Group Ltd was founded in 1897 and is headquartered in Basel, Switzerland.

Show Full description

1.b. Last Insights on LONN

Negative drivers behind Lonza Group AG's recent performance include market challenges and competition from peers. The company's medical stocks have lagged behind Bayer Aktiengesellschaft (BAYRY) this year, as seen in the latest market talks. Additionally, the sector's performance has been impacted by factors such as Hims & Hers and U.K. pharmaceutical stocks. Furthermore, the collaboration between Ethris and Lonza to develop mRNA vaccines for respiratory conditions, while a positive development, may not have yet translated into significant revenue growth.

1.c. Company Highlights

2. Lonza's Robust Half-Year Performance

Lonza reported an impressive CHF 3.6 billion in sales for the first half of 2025, reflecting a 19% CER sales growth compared to 2024. Core EBITDA reached CHF 1.1 billion, with a margin of 29.6%, a 0.4 percentage point increase. The company's EPS came out at CHF 7.52, beating estimates of CHF 7.07. This strong financial performance was driven by sustained commercial demand, good growth project execution, and the Vacaville acquisition.

Publication Date: Jul -25

📋 Highlights
  • Sales Growth and Margin Expansion: CHF 3.6 billion in sales, 19% CER growth, with core EBITDA margin rising to 29.6% (+0.4pp).
  • CDMO Business Performance: 23.1% sales growth, core EBITDA margin above 30%, driven by sustained demand and acquisitions.
  • Raised Full-Year Guidance: Now expects 20-21% CER sales growth and 30-31% core EBITDA margin, reflecting strong execution.
  • CapEx Investment: CHF 672 million spent (19% of sales), 64% on growth projects, supporting expansion and future value creation.
  • Free Cash Flow Generation: CHF 0.2 billion in H1, despite lower customer funding and increased working capital needs, impacting year-over-year decrease.

Segmental Performance

The CDMO business saw a significant 23.1% sales growth, with a core EBITDA margin above 30%. Integrated Biologics and Advanced Synthesis were the main drivers of sales growth. The company's Advanced Synthesis (ADS) business reported revenue and EBITDA margin significantly ahead of consensus, with a margin of around 40%. According to CFO Philippe Deecke, "40% is a base value that can go up or down, but it's not a peak."

Guidance and Outlook

Lonza has raised its guidance for the full year, expecting 20-21% CER sales growth and a core EBITDA margin of 30-31%. The company expects a negative 2.5-3.5% impact on sales and core EBITDA from currency fluctuations for the full year, assuming current FX rates prevail. The company prioritizes investing in maintenance, infrastructure, and systems, as well as maintaining or increasing its dividend year-on-year.

Valuation and Financials

At current prices, Lonza trades at a P/E Ratio of 63.66, a P/B Ratio of 4.34, and a P/S Ratio of 5.94. The EV/EBITDA multiple stands at 27.12, while the Dividend Yield is 0.7%. The Free Cash Flow Yield is -0.23%, and the ROIC is 5.1%. With a Net Debt / EBITDA of 2.52, the company's valuation appears rich, but its growth prospects and strong performance justify the premium.

Growth Prospects and Risks

The company's growth prospects are driven by its CDMO business, with sustained demand and good project execution. However, the exit of the CHI business and the planned modifications in the Specialized Modalities (SPM) business may pose risks to growth. Additionally, the company's guidance for 2025 implies that 2-3 more contracts are needed from here, assuming they come online by 2028. Analysts estimate next year's revenue growth at 11.0%.

3. NewsRoom

Card image cap

Can Mixed Fundamentals Have A Negative Impact on Lonza Group AG (VTX:LONN) Current Share Price Momentum?

Oct -30

Source:

Card image cap

Lonza confirms "long-term commercial supply agreement" at U.S. biologic drug site

Oct -23

Source:

Card image cap

Is Now An Opportune Moment To Examine Lonza Group AG (VTX:LONN)?

Oct -10

Source:

Card image cap

PHG vs. LZAGY: Which Stock Is the Better Value Option?

Oct -06

Source:

Card image cap

Lonza's Synaffix Collaborates with Qurient Therapeutics to Enable Development of Dual-Payload ADC

Sep -25

Source:

Card image cap

Here's Why Lonza Group (LZAGY) Is a Great 'Buy the Bottom' Stock Now

Sep -22

Source:

Card image cap

Does Heineken’s Slump Signal Opportunity After Record Low US Alcohol Consumption?

Sep -09

Source:

Card image cap

Enel (BIT:ENEL): Is the Current Valuation Overlooking Subtle Shifts in Performance?

Sep -09

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.90%)

6. Segments

Biologics

Expected Growth: 12.0%

The biologics segment is expected to grow faster than the global average due to the increasing demand for biologic drugs, driven by their efficacy and the growing prevalence of chronic diseases. Lonza's strong position in this market and its capabilities in biologic drug development and manufacturing will drive growth.

Small Molecules

Expected Growth: 9.0%

The small molecules segment is expected to grow at a slower rate than the global average due to pricing pressure and the commoditization of some small molecule products. However, Lonza's capabilities and customer relationships will help maintain a steady growth trajectory.

Cell & Gene

Expected Growth: 15.0%

The cell & gene segment is expected to be a key growth driver due to the rapidly expanding pipeline of cell and gene therapies and the increasing demand for specialized manufacturing services. Lonza's expertise and investment in this area will enable it to capture a significant share of this growing market.

Capsules & Health Ingredients

Expected Growth: 10.9%

The capsules & health ingredients segment is expected to grow in line with the global average, driven by steady demand from the food and pharmaceutical industries. Lonza's capabilities in manufacturing high-quality capsules and ingredients will support this growth.

Corporate/Eliminations

Expected Growth: 0.0%

As this segment involves eliminations and corporate functions, it is not expected to contribute to revenue growth. The focus is on the operational segments for growth analysis.

7. Detailed Products

Cell and Gene Therapies

Lonza provides a range of cell and gene therapies for the treatment of various diseases, including cancer, genetic disorders, and infectious diseases.

Viral Vectors

Lonza offers a range of viral vectors, including lentiviral, adenoviral, and adeno-associated viral vectors, for gene therapy and vaccine development.

Bioscience Solutions

Lonza provides a range of bioscience solutions, including cell culture media, buffers, and reagents, for life science research and development.

Pharmaceutical Development Services

Lonza offers a range of pharmaceutical development services, including formulation development, analytical testing, and clinical trial manufacturing.

Small Molecule APIs

Lonza provides a range of small molecule active pharmaceutical ingredients (APIs) for the treatment of various diseases.

Biopharmaceutical Development Services

Lonza offers a range of biopharmaceutical development services, including cell line development, process development, and analytical testing.

Contract Manufacturing

Lonza provides contract manufacturing services for pharmaceutical, biotech, and specialty ingredient companies.

8. Lonza Group AG's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Lonza Group AG is moderate, as there are some alternatives available in the market, but they are not very attractive to customers.

Bargaining Power Of Customers

The bargaining power of customers for Lonza Group AG is low, as the company has a diverse customer base and no single customer accounts for a significant portion of its revenue.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Lonza Group AG is moderate, as the company relies on a few key suppliers for certain raw materials, but it also has some bargaining power due to its large scale of operations.

Threat Of New Entrants

The threat of new entrants for Lonza Group AG is low, as the company operates in a highly regulated industry and has significant barriers to entry, including high capital requirements and complex manufacturing processes.

Intensity Of Rivalry

The intensity of rivalry for Lonza Group AG is high, as the company operates in a highly competitive industry with several large players, and there is a constant need to innovate and differentiate its products and services to stay ahead of the competition.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 23.09%
Debt Cost 3.95%
Equity Weight 76.91%
Equity Cost 7.16%
WACC 6.42%
Leverage 30.01%

11. Quality Control: Lonza Group AG passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
bioMérieux

A-Score: 5.1/10

Value: 2.0

Growth: 5.3

Quality: 6.6

Yield: 1.2

Momentum: 6.5

Volatility: 9.0

1-Year Total Return ->

View Full Report
Stock-Card
Eurofins Scientific

A-Score: 4.6/10

Value: 3.1

Growth: 6.0

Quality: 3.9

Yield: 1.9

Momentum: 7.0

Volatility: 6.0

1-Year Total Return ->

View Full Report
Stock-Card
Merck KGaA

A-Score: 4.4/10

Value: 4.2

Growth: 4.9

Quality: 6.5

Yield: 3.1

Momentum: 1.0

Volatility: 6.7

1-Year Total Return ->

View Full Report
Stock-Card
IQVIA

A-Score: 4.1/10

Value: 3.5

Growth: 6.9

Quality: 5.4

Yield: 0.0

Momentum: 3.0

Volatility: 6.0

1-Year Total Return ->

View Full Report
Stock-Card
Lonza

A-Score: 4.1/10

Value: 2.8

Growth: 4.3

Quality: 4.7

Yield: 1.2

Momentum: 4.0

Volatility: 7.7

1-Year Total Return ->

View Full Report
Stock-Card
ICON

A-Score: 3.5/10

Value: 4.6

Growth: 7.3

Quality: 6.5

Yield: 0.0

Momentum: 0.5

Volatility: 2.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

543.2$

Current Price

543.2$

Potential

-0.00%

Expected Cash-Flows