September 28, 2023
Top 10 Stock Lonza Hold Recommendation

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For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).

360° View: Obermatt 360° View Lonza Hold

360 METRICS	September 28, 2023
VALUE
VALUE	9
GROWTH
GROWTH	55
SAFETY
SAFETY	64
SENTIMENT
SENTIMENT	68
360° VIEW
360° VIEW	49

ANALYSIS: With an Obermatt 360° View of 49 (better than 49% compared with alternatives), overall professional sentiment and financial characteristics for the stock Lonza are below the industry average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Lonza. The consolidated Growth Rank has a good rank of 55, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. This means that growth is higher than for 55% of competitors in the same industry. The consolidated Safety Rank at 64 means that the company has a financing structure that is safer than 64% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a good rank of 68, which means that professional investors are more optimistic about the stock than for 68% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 9, meaning that the share price of Lonza is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 91% of alternative stocks in the same industry. ...read more

RECOMMENDATION: With a consolidated 360° View of 49, Lonza is worse than 51% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as above-average growth (Growth Rank of 55), a safe financing structure (Safety Rank of 64), and positive professional market sentiment (Sentiment Rank of 68), it is a solid stock investment where growth may be the strongest driver of the investment rationale, also reflected by institutional investors. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Lonza compared with alternatives? You can use the following rule of thumb: The growth rank measures the growth momentum of the company (55% better than peers). The value rank could be the reverse reflection of that (45%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just reflects the past, sometimes the reality. You pay more than the market average for this stock, but it may be worth it. ...read more

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Sentiment Strategy: Professional Market Sentiment for Lonza positive

SENTIMENT METRICS	September 28, 2023
ANALYST OPINION
ANALYST OPINION	73
OPINIONS CHANGE
OPINIONS CHANGE	46
PRO HOLDINGS
PRO HOLDINGS	20
MARKET PULSE
MARKET PULSE	89
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	68

ANALYSIS: With an Obermatt Sentiment Rank of 68 (better than 68% compared with alternatives), overall professional sentiment and engagement for the stock Lonza is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and half above average for Lonza. Analyst Opinions are at a rank of 73 (better than 73% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. Market Pulse is also positive with a rank of 89, which means that the current professional news and professional social networks are positive when discussing this company (more positive news than for 89% of competitors). But Analyst Opinions Change is negative with a below 50 rank of 46, which means that stock research experts are changing their opinions for the worse in recommending the company. In other words, they are getting more critical of investments in Lonza. There are also only so many institutional investors holding company stock with a Professional Investors rank of 20, which means that, currently, professional investors hold less stock in this company than in 80% of alternative investment opportunities. Pros tend to invest in other companies. ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 68 (more positive than 68% compared with investment alternatives), Lonza has a reputation among professional investors that is above-average compared with that of its competitors. The signals are ambivalent. The positive news in the market contradicts the negative change in analyst recommendations. Since the overall analyst recommendations are still above average, the stock may be safer for investing, especially if it is not an extra-large company where Pros tend to be less present. In such a case, the Pro Investor rank is not a problem. ...read more

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Value Strategy: Lonza Stock Price Value low

VALUE METRICS	September 28, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	11
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	12
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	34
DIVIDEND YIELD
DIVIDEND YIELD	26
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	9

ANALYSIS: With an Obermatt Value Rank of 9 (worse than 91% compared with alternatives), Lonza shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Lonza. Price-to-Sales is 11 which means that the stock price compared with what market professionals expect for future profits is higher than 89% of comparable companies, indicating a low value concerning Lonza's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 34, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Lonza. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 12 and Dividend Yield, which is lower than 74% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 9, is a sell recommendation based on Lonza's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Lonza? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Lonza? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Lonza may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more

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Growth Strategy: Lonza Growth Momentum good

GROWTH METRICS	September 28, 2023
REVENUE GROWTH
REVENUE GROWTH	80
PROFIT GROWTH
PROFIT GROWTH	47
CAPITAL GROWTH
CAPITAL GROWTH	21
STOCK RETURNS
STOCK RETURNS	45
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	55

ANALYSIS: With an Obermatt Growth Rank of 55 (better than 55% compared with alternatives), Lonza shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below-average for Lonza. While Sales Growth ranks at 80, professionals currently expect the company to grow more than 80% of its competitors, while all other growth ranks are below the market median. Profit Growth has a rank of 47, which means that, currently, professionals expect the company to grow its profits less than 53% of its competitors, and Capital Growth has a low rank of 21. Historic stock returns were also below average with a current Stock Returns rank of 45 which means that the stock returns have recently been below 55% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 55, is a buy recommendation for growth and momentum investors. If revenues are expected to increase, but all other growth indicators are negative, the company may be investing in future growth through means not visible in the balance sheet and thus not reflected in capital growth. The fact that Stock Returns have been below market doesn't mean that much, as it may be due to overly optimistic investor behavior in the past, which has been corrected to a more reasonable level recently. If that were the case, a positive Value Rank would be a reason to invest because the company is still expected to grow, while stock prices are now at a more reasonable level. ...read more

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Safety Strategy: Lonza Debt Financing Safety above-average

SAFETY METRICS	September 28, 2023
LEVERAGE
LEVERAGE	74
REFINANCING
REFINANCING	33
LIQUIDITY
LIQUIDITY	63
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	64

ANALYSIS: With an Obermatt Safety Rank of 64 (better than 64% compared with alternatives), the company Lonza has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Lonza is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Lonza. Leverage is at a rank of 74, meaning the company has a below-average debt-to-equity ratio. It has less debt than 74% of its competitors. Liquidity is also good at a rank of 63, meaning the company generates more profit to service its debt than 63% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 33, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 67% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 64 (better than 64% compared with alternatives), Lonza has a financing structure that is safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Lonza. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more

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Combined financial peformance: Lonza Below-Average Financial Performance

COMBINED PERFORMANCE	September 28, 2023
VALUE
VALUE	9
GROWTH
GROWTH	55
SAFETY
SAFETY	63
COMBINED
COMBINED	28

ANALYSIS: With an Obermatt Combined Rank of 28 (worse than 72% compared with investment alternatives), Lonza (Life Sciences Tools & Services, Switzerland) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Lonza are low in value (priced high) with a consolidated Value Rank of 9 (worse than 91% of alternatives). But they show above-average growth (Growth Rank of 55) and are safely financed (Safety Rank of 64, which means below-average debt burdens). ...read more

RECOMMENDATION: A Combined Rank of 28, is a hold recommendation based on Lonza's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Lonza exhibits low value (Obermatt Value Rank of 9), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 55). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 64) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more

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