On Monday, RBC Capital initiated coverage on Bachem Holding AG (BANB:SW) stock with an Outperform rating and a price target of CHF100. The firm highlighted the company's involvement in the GLP-1 obesity market and identified several growth drivers through an analysis of proprietary SEC filings.
Bachem's financial position, characterized by strong margins and a net cash status, positions it as a leading Contract Development and Manufacturing Organization (CDMO) within RBC Capital's coverage.
The firm forecasts a significant growth trajectory for Bachem, projecting a 26% compound annual growth rate (CAGR) in revenue from 2024 to 2026 and a 31% CAGR in EBITDA over the same period.
This growth is expected despite the company's continued high capital expenditures. The analyst notes that Bachem's return on capital employed (ROCE) is anticipated to return to the low teens, indicating efficient profitability relative to capital usage.
RBC Capital's analysis suggests that Bachem Holding AG is well-positioned to maintain a substantial premium in its valuation compared to its peers. The company's robust financial performance and strategic market position contribute to this positive outlook.
The price target of CHF100 represents RBC Capital's expectation of Bachem's stock performance, taking into account the company's solid fundamentals and potential for sustained growth. The Outperform rating implies that the firm believes Bachem's shares will perform better than those of other companies in the sector over the forecast period.
Bachem's strategic focus on the obesity market, coupled with its strong financial health, are central to RBC Capital's positive assessment. The company's ability to generate high growth rates in both revenue and EBITDA is seen as a testament to its operational excellence and market potential.
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