Crossject

Our target price goes down, mainly due to the lower DCF valuation after the group presented its new strategy in mid-november, which is based on a focus on emergency products, the US and a larger agreement with Cenexi, which should spend over €5m to bring total capacities to over 10m units a year (vs 2m). Timing remains the main issue and is of course the first reason behind our lower valuation, which also captures the disappointment after the group postponed again the market launch of Zeneo, by at least a year (2019 at the earliest vs late 2017 previously).

Our EPS goes marginally down for FY17, where we initially had the first revenues stemming from Methotrexate, which are now postponed to FY19. Other than this, we have not changed our short–term forecasts.

Our SOTP valuation also goes down, since it is computed on average sales over the first year after each product reaches the market (FY19-21). In particular, sales are lower per product since US sales will typically come a year after first European sales, while average prices are higher in the US, explaining the bulk of the lower valuation obtained through this method, which leads to very similar results to the DCF.

We have revised our forecasts, based on later-than-expected product launches (with, for each product, a first launch in Europe and a year later in the US). We have also lowered the level of capex from 2017 onwards, since the bulk of capex will be spent by Cenexi, the group’s global industrial partner. We have so far considered that the level of margins is unchanged compared to the scenario where Crossject was investing and producing Zeneo devices instead of subcontracting. Our valuation, unsurprisingly, goes down, in line with our view that timing is the biggest issue the group currently has to face and despite a lower future capex level.