Long-Term Procedure Growth And Cost Efficiencies Will Transform Earnings Power

Catalysts

About medmix

medmix supplies precision delivery devices and systems across Healthcare and Consumer & Industrial end markets.

What are the underlying business or industry changes driving this perspective?

• Dental and Surgery are aligned with growing procedure volumes and higher value therapies, and medmix is shifting its Dental mix into faster growing categories like cementation and adhesives, which can support structurally higher revenue and gross margins over time.
• The build out of U.S. capacity in Atlanta and Elgin for Surgery, Beauty and Drug Delivery allows more local-for-local production, which can help secure customer relationships, support volume growth and protect EBITDA margins as tariffs and logistics costs evolve.
• New healthcare platforms such as PiccoJect and D Flex, supported by a solid pipeline across originators, biosimilars and generics, position medmix to benefit as more injectable therapies are launched, with potential upside to medium term revenue and earnings as projects move from development to commercial supply.
• The CliX applicator ecosystem and the Vented G System in Surgery target efficiency and material savings for OEMs and clinicians, which can strengthen medmix’s role as a preferred partner and support pricing power, helping gross margin and EBIT resilience.
• The multiyear greenLine and ecopaCC partnerships in Industry, including new wins with SIKA, Huntsman, Gurit and entry into aerospace, tap into long run demand for more sustainable solutions, which can underpin steadier volume growth and support EBITDA margin through higher value product mix.

Assumptions

How have these above catalysts been quantified?

• This narrative explores a more optimistic perspective on medmix compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming medmix's revenue will grow by 4.7% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 1.4% today to 6.6% in 3 years time.
• The bullish analysts expect earnings to reach CHF 34.2 million (and earnings per share of CHF 0.83) by about July 2029, up from CHF 6.4 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as CHF20.4 million.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 22.6x on those 2029 earnings, down from 50.2x today. This future PE is lower than the current PE for the CH Medical Equipment industry at 30.7x.
• The bullish analysts expect the number of shares outstanding to decline by 0.36% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.28%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Revenue is currently reliant on Dental and Surgery growing faster than the rest of the group while Drug Delivery and Beauty are under pressure. If the weaker business units fail to recover, or if Dental and Surgery growth cools from recent levels, group revenue could remain subdued and weigh on earnings over time.
• Drug Delivery is facing customer dual sourcing and missing non repeat project milestones, and management expects more impact in the second half of 2025. If large customers continue to diversify suppliers or reduce project volumes, this could structurally reduce volumes, soften pricing power and limit future earnings growth.
• Beauty has already seen lower commercial activity, project delays and a slower than expected recovery. Even with cost out measures and automation plans, a prolonged slowdown in end markets or sustained order delays could keep segment revenues under pressure and cap EBITDA margin progress at group level.
• The company is leaning heavily on a CHF 30 million cost out and efficiency program, including headcount reductions and automation. If execution is slower than planned, savings do not fully materialize, or are offset by inflation, tariffs and litigation or restructuring provisions, EBIT margin and net profit could fall short of expectations.
• Exposure to U.S. tariffs in Dental and Industry and reliance on price increases to pass through up to two thirds of the impact introduce a long term risk. Customers may resist or delay price adjustments, tariffs may be higher or last longer than expected, or FX may remain adverse, all of which could drag on gross margin, EBITDA and operating cash flow.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for medmix is CHF16.0, which represents up to two standard deviations above the consensus price target of CHF15.8. This valuation is based on what can be assumed as the expectations of medmix's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be CHF514.4 million, earnings will come to CHF34.2 million, and it would be trading on a PE ratio of 22.6x, assuming you use a discount rate of 6.3%.
• Given the current share price of CHF7.9, the analyst price target of CHF16.0 is 50.6% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.