Til trods for dårligt regnskab for Q2 er Fair Value Estimate for Novozymes uændret da dette allerede var indregnet i prisen

Price/Fair Value is 1,08 with a Wide Moat rating.

Investeringskommentar, Kelsey Tsai, Analyst, 10/08/2016

After Novozymes lowered its full-year guidance during its second-quarter earnings release, the consequent stock sell-off places the company’s share price roughly in line with our DKK 265 fair value estimate. Novozymes lowered its full-year guidance for organic sales growth to 2%-4% from 3%-5%, although reported sales and net profit guidance remained unchanged. Unexpected headwinds in the agriculture and feed business, coupled with a worse-than-anticipated pricing environment in the bioenergy markets were to blame. We do not plan on changing our fair value estimate as the second-quarter weakness was largely reflected in our original assumptions--our minor near-term forecast updates were offset by the time value of money. Despite recent challenges, we believe wide-moat Novozymes’s innovative and diversified enzyme business will allow the firm to maintain strong returns on capital for the foreseeable future.

Soft second-quarter sales in the agriculture and feed and bioenergy units were offset by solid growth in the household care and technical and pharma segments, amounting to flat year-over-year growth (3% in constant currency) and revenues totaling DKK 3,429 million. Household care products grew 3% (4% in constant currency) from last quarter thanks to U.S. demand for premium detergent products, while the technical and pharma unit grew 18% (22% in constant currency) off a relatively small base. Food and beverage sales were a mixed bag, resulting 1% revenue growth from a year prior (3% constant currency).


Bulls Say

- Novozymes is the dominant player in the industrial enzymes market, allowing it to generate high margins and returns on capital.

- Second-generation biofuels are poised to grow significantly as new plants are being built, creating significant new demand for Novozymes’ products.

- Growing demand in emerging countries will continue to allow opportunities for Novozymes to gain share in the detergent and food and beverage markets.


Bears Say

- The company’s focus on the ethanol production market is dependent on U.S. energy policies that could be subject to sudden political change.

- Novozymes' largest end markets--household care and food and beverage--are maturing, and growth rates will probably be lower than in the past.

- Current high valuation multiples incorporate high expectations for growth and margins. With increasing competition and expansion into new markets, the company may not be able to meet such high benchmarks.

Om forfatteren

Morningstar Analysts   -