Healthy Q2, guidance reiterated; remains a SELL due to uncertainties

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Carl Zeiss Meditech AG (CZM) reported a good set of results in Q2 FY 2022. Order intake was high, and revenue growth remained solid across segments and geographies. Moreover, the adj. EBIT margin was strong, supported by a strong recurring revenue business. The group confirmed its FY 2022 guidance. However, it contains multiple risk discounts, which compels us to continue with our wait and watch strategy. CZM has secured market-leading positions in the bulk of its revenues; for example, in ophthalmic diagnostics, refractive laser, and Microsurgery (MCS). The target markets of CZM are benefitting from several structural growth drivers, translating into rising demand for CZM medical equipment, with expected growth rates of 8%-9% (eAR) over the coming years. Hence, the competitive quality is outstanding. However, near-term uncertainty seems high due to supply chain headwinds and regional lockdowns in China. We reiterate our SELL rating with a reduced PT of EUR 101.00 (EUR 106.00).

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