Lonza LONN.SW
What does Lonza do?
Lonza is a contract development and manufacturing organization (CDMO) for the pharmaceutical and biotech industry, headquartered in Switzerland. The company supports customers from early clinical development through active ingredient production to the manufacture of finished dosage forms. Revenue arises mainly from long-term supply and development contracts with pharmaceutical groups and biotech firms.
The business is divided into the segments Integrated Biologics, Advanced Synthesis and Specialized Modalities. Integrated Biologics covers the production of biological active ingredients in mammalian cell cultures as well as fill-finish and drug delivery solutions. Advanced Synthesis covers small molecules, highly potent active ingredients and bioconjugates such as antibody-drug conjugates. Specialized Modalities bundles offerings for novel therapy types. Competitively, Lonza benefits from technical expertise, high regulatory barriers to entry and close customer relationships, but competes with other large CDMOs and with in-house production by pharmaceutical customers.
Score profile
Rank vs. Diagnostics & Research (24 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Lonza ranks in the middle in the group Diagnostics & Research (4.7/10). On growth, the company ranks above average in the group Diagnostics & Research (7.3/10). On valuation (higher = cheaper), the stock ranks in the middle in the group Diagnostics & Research (5.1/10). On financial strength, Lonza ranks below average in the group Diagnostics & Research (3.8/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 29.5x | 26.7x | better than 36 % |
| Trailing P/E | 43.8x | 37.0x | better than 24 % |
| PEG ratio | 1.2x | 1.7x | better than 76 % |
| EV/EBITDA | 20.8x | 22.5x | better than 60 % |
| Price/sales | 6.7x | 4.9x | better than 31 % |
| Price/book | 5.7x | 5.1x | better than 41 % |
| Revenue growth | 11.2% | 8.8% | better than 65 % |
| Earnings growth | 39.2% | 17.0% | better than 81 % |
| Gross margin | 37.1% | 51.8% | better than 31 % |
| Operating margin | 23.4% | 16.3% | better than 77 % |
| Net margin | -1.6% | 9.1% | better than 19 % |
| Return on equity | 12.9% | 10.3% | better than 60 % |
| Debt/equity | 51.1% | 56.1% | better than 63 % |
| Current ratio | 1.7x | 1.8x | better than 41 % |
| Free cash flow yield | -3.4% | 2.7% | better than 10 % |
| Dividend yield | 0.8% | 0.8% | – |
| Payout ratio | 32.3% | 25.1% | – |
| Beta | 0.80 | 1.17 | – |
Valuation: what is Lonza worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Lonza a model range of 599.28 CHF to 720.24 CHF per share.
23 analysts, average rating “Buy”, average price target 716.17 CHF (+8.3%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- The outsourcing of development and production by pharmaceutical and biotech companies determines demand for CDMO services.
- Utilization of production facilities and the success of long-term customer contracts significantly influence revenue and margins.
- Growth in biological medicines and complex therapies, such as antibody-drug conjugates, expands the addressable market.
Risks
- Quality or compliance deficiencies at production sites may jeopardize orders and lead to regulatory action.
- Customer concentration and the failure of individual drugs in the approval process may weigh on revenue.
- High investment in capacity carries the risk of underutilization, cost overruns and currency-related burdens.
What to look for with Lonza
The operating margin before depreciation and amortization (CORE EBITDA margin) shows how profitably capacity is utilized and how much pricing power exists in capital-intensive production.