This Biotech Company Should be a Core Holding in your Portfolio
Most biotech plays and recommendations from the likes of Reddit tend to be high risk, high reward plays which can often have little probability of ever paying off.
Are you looking for a large biotech company which is profitable with consistently growing revenue? With over 15,000 employees across 5 continents, Lonza is one of the largest biotechnology companies with HQ in Europe. Lonza is a leading healthcare solution provider, optimizing scientific innovation and manufacturing technology for their partners across 4 key areas: Small Molecules, Biologics, Cell & Gene, Capsules & Health Ingredients.
In 2020, Lonza supported over 820 preclinical and clinical small and large molecules, and more than 245 commercial small and large molecules. Lonza are also the manufacturer for Moderna’s COVID-19 vaccine.
Listed on the SIX Swiss Exchange, $LONN generated sales of CHF 2.5 billion with a CORE EBITDA of CHF 847 million in H1 2021. Lonza Group has been a powerhouse in the biotech field and has been able to grow EPS by 25% per year over three years.
What is Lonza’s business strategy?
Lonza have recently redefined their business strategy into 4 focus areas:
- Small Molecules
This area is focused on helping Lonza’s partners to develop, manufacture, and innovate their small molecule medicines by providing integrated drug substance and drug product services. These include APIs, Advanced Intermediates, Particle Engineering, and more.
- Biologics
Lonza Biologics uses advanced technologies to quickly and efficiently deliver products such as monoclonal antibodies, complex proteins and recombinant proteins, primarily working with mammalian and microbial cells.
- Cell & Gene
Lonza’s Cell & Gene focus is home to their automation Cocoon® platform, which Lonza markets as “the next level in patient-specific cell therapy manufacturing”, enabling companies to quickly and efficiently advance their project from pre-clinical all the way through to commercial-scale manufacturing.
- Capsules & Health Ingredients
Offering high quality capsule design and manufacturing for Lonza’s industry partners, the company has been instrumental in the launch of new products and existing therapeutics worldwide. In 2020 alone, Lonza produced an impressive 230 billion capsules for their customers.
Are insiders invested in Lonza?
Insiders being heavily invested in a company is always a good sign, signifying a positive future outlook for the company by those on the inside. Insiders have consistently held CHF44m ($44m / £35m) worth of its stock. That shows significant buy-in, and the lack of selling indicates ongoing conviction in their business strategy.
How much of $LONN is owned by retail investors?
Retail investors hold a susbstanital 57% stake in the company — this is a promising sign suggesting not only that it is a popular stock, but it also gives retail investors more power. They will have more say on decisions including dividend policies, and proposed business acquisitions; and also institutions will have less power on the movement of stock price.
Should I invest in Lonza?
Lonza is without a doubt a key player in the biotech industry, with a focus developing and manufacturing innovative products and tools across a range of focus areas for their customers.
I believe we are in the middle of a biotechnological revolution, similar to the semiconductor revolution we have already witnessed, and Lonza’s foothold in providing companies with the essential solutions they need to operate puts the company towards the helm of the industry.
As of writing the stock currently trades at $750, and is a mere 4% off of its ATH. I would currently recommend a buy point under $700 if you’re looking to add Lonza as one of your long-term positions in your portfolio.
