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Lonza Group
(OTC:LZAGY)
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Rating:62Neutral
Price Target:
$77.00
▲(6.44% Upside)
Action:Reiterated
Date:07/22/26
The score is primarily constrained by weak cash generation in the financial statements (persistent negative free cash flow and low cash conversion) despite solid profitability and manageable leverage. Offsetting this, the latest earnings call was notably positive with upgraded margin guidance, strong organic growth, and sharply improved free cash flow. Technicals are mildly supportive, while valuation metrics are a headwind due to a negative P/E and a low dividend yield.
Positive Factors
Broad CDMO capabilities and recurring outsourcing model
Lonza’s broad development and manufacturing capabilities support customers from early development through commercial supply. This creates switching costs, diversified demand, and potential for recurring multi-year revenue as therapies advance.
Negative Factors
Historically weak cash conversion and negative free cash flow
Despite reported profitability and recent cash-flow improvement, persistently weak conversion indicates substantial working-capital or reinvestment demands. If this pattern continues, less cash will be available for debt reduction, shareholder returns, or flexibility.
Read all positive and negative factors
Positive Factors
Negative Factors
Broad CDMO capabilities and recurring outsourcing model
Lonza’s broad development and manufacturing capabilities support customers from early development through commercial supply. This creates switching costs, diversified demand, and potential for recurring multi-year revenue as therapies advance.
Read all positive factors
Lonza Group (LZAGY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$48.96B
Dividend Yield0.81%
Average Volume (3M)24.28K
Price to Earnings (P/E)―
Beta (1Y)0.72
Revenue Growth-2.43%
EPS Growth-114.56%
CountryUS
Employees16,866
SectorHealthcare
Sector Strength45
IndustryBiotechnology
Share Statistics
EPS (TTM)-0.12
Shares Outstanding702,290,200
10 Day Avg. Volume30,760
30 Day Avg. Volume24,277
Financial Highlights & Ratios
PEG Ratio0.74
Price to Book (P/B)4.09
Price to Sales (P/S)5.71
P/FCF Ratio-191.57
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)2.23
Revenue Forecast (FY)$8.73B
Lonza Group Business Overview & Revenue Model
Company Description
Lonza Group AG engages in the supply of pharmaceutical, healthcare, and life science products. It operates through the following segments: Biologics, Small Molecules, Cell and Gene, Capsule and Health Ingredients, and Corporate. The Biologics segm...
How the Company Makes Money
Lonza makes money primarily by providing outsourced development and manufacturing services under contract to pharmaceutical, biotechnology, and other life-sciences customers. Its revenue model is CDMO-driven and typically includes: (1) development...
Lonza Group Earnings Call Summary
Earnings Call Date:Jul 22, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Jan 27, 2027
Earnings Call Sentiment Positive
The call emphasized strong, broad-based organic growth, meaningful margin expansion, and a large improvement in free cash flow, supported by strategic portfolio moves (divestment) and targeted growth investments. Near-term headwinds include FX effects, site-specific shutdowns and ramp-related margin dilution, and elevated working capital. Management reiterated disciplined capital allocation and an upgraded margin outlook, while cautioning that H2 will likely see normalized growth rates and margins versus an unusually strong H1. Overall the positives (robust growth, profitability, cash flow and strategic clarity) materially outweigh the operational and timing-related drawbacks.Positive Updates
Strong Top-Line Growth
Sales of CHF 3.4 billion in H1 2026, with constant exchange rate (CER) sales growth of 16% versus H1 2025. Growth reported as entirely organic (H1 2025 benefitted from the Vacaville acquisition). In actual FX terms, sales grew 11.2% (FX headwind of ~5 ppt in H1).
Negative Updates
FX Headwinds and Mixed Reported Growth
Actual-reported growth lagged CER growth due to currency movements: H1 FX headwind was ~5 percentage points resulting in 11.2% reported sales growth; full-year FX impact expected to be -2 to -3 ppt.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong Top-Line Growth
Sales of CHF 3.4 billion in H1 2026, with constant exchange rate (CER) sales growth of 16% versus H1 2025. Growth reported as entirely organic (H1 2025 benefitted from the Vacaville acquisition). In actual FX terms, sales grew 11.2% (FX headwind of ~5 ppt in H1).
Read all positive updates
Company Guidance
Guidance: Lonza upgraded its full‑year 2026 CORE EBITDA margin to 33–34% and reconfirmed 11–12% CER sales growth for the year; H1 trading underpins this with sales of CHF 3.4bn (CER +16%), CORE EBITDA of CHF 1.2bn (CORE EBITDA +27.4% vs H1 2025) and a CORE EBITDA margin of 34.8% (+4.4pp). Free cash flow rose to CHF 426m (vs CHF 116m prior year, ≈+CHF310m), ROIC improved to 13.2% (≈+3pp), and H1 CapEx was CHF 530m (15.7% of sales, ~60% into growth projects). Platform metrics: Integrated Biologics CHF 1.87bn (CER +10%, CORE EBITDA CHF 674m, margin 36%); Advanced Synthesis CHF 834m (CER +27.7%, CORE EBITDA CHF 401m, margin 48.1%); Specialized Modalities CHF 553m (CER +22.6%, CORE EBITDA CHF 155m, margin 28%). Other guidance/assumptions: FY FX headwind of ~‑2 to ‑3pp (H1 FX hit ~‑5pp, AER sales +11.2%), Vacaville ~CHF 0.6bn FY sales, trade working capital 37.9% of sales, organic CapEx >CHF 7bn to 2030 with ongoing mid–high‑teens % of sales investment, project return targets IRR ≥15% and peak ROIC ≥30%, and key project ramp timelines (Visp payload linker ~ramp 2029; Stein ADC fill ~ramp 2030; peak sales by mid‑2030s).Lonza Group Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
67
Positive
Cash Flow
38
Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.40B | 6.53B | 6.57B | 6.72B | 6.22B | 5.41B |
| Gross Profit | 2.34B | 2.31B | 2.16B | 1.95B | 2.44B | 2.11B |
| EBITDA | 2.07B | 1.31B | 1.54B | 1.53B | 1.98B | 1.31B |
| Net Income | 1.13B | 949.00M | 636.00M | 654.00M | 1.22B | 2.94B |
Balance Sheet | ||||||
| Total Assets | 18.26B | 18.97B | 19.73B | 16.85B | 17.36B | 16.46B |
| Cash, Cash Equivalents and Short-Term Investments | 487.00M | 719.00M | 1.71B | 1.67B | 2.22B | 3.18B |
| Total Debt | 4.17B | 4.54B | 5.12B | 3.13B | 2.59B | 2.75B |
| Total Liabilities | 10.11B | 9.78B | 10.35B | 7.34B | 6.69B | 6.64B |
| Stockholders Equity | 8.12B | 9.13B | 9.33B | 9.45B | 10.60B | 9.75B |
Cash Flow | ||||||
| Free Cash Flow | 143.53M | -194.83M | -143.00M | -263.00M | -833.00M | -126.00M |
| Operating Cash Flow | 1.48B | 1.12B | 1.27B | 1.39B | 1.04B | 1.22B |
| Investing Cash Flow | -1.17B | -699.09M | -2.92B | -1.10B | -991.00M | 1.02B |
| Financing Cash Flow | -677.60M | -721.06M | 1.28B | -152.00M | -286.00M | -1.28B |
Lonza Group Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $86.84B | 19.76 | 13.81% | 0.55% | 9.29% | 0.38% | |
78 Outperform | $12.57B | 31.30 | 180.63% | ― | 41.15% | -21.44% | |
70 Outperform | $12.86B | 175.08 | 1.18% | ― | 13.69% | -89.03% | |
68 Neutral | $59.43B | -18.24 | -39.20% | ― | -27.62% | -6.22% | |
62 Neutral | $48.96B | -368.31 | -1.27% | 0.85% | -2.43% | -114.56% | |
56 Neutral | $25.84B | -13.25 | -9.16% | ― | -1.05% | -395.95% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
LZAGY
Lonza Group
70.01
-1.89
-2.64%
BMRN
BioMarin Pharmaceutical
66.53
8.76
15.16%
HALO
Halozyme
110.19
35.26
47.06%
REGN
Regeneron
827.72
257.27
45.10%
MRNA
Moderna
145.55
120.41
478.96%
BNTX
BioNTech SE
103.76
-8.70
-7.74%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.