Intrinsic Value Bachem Holding AG (BANB.SW)

• Previous Close: CHF70.00
• Intrinsic Value: CHF21.77
• Upside potential: -69%

Stock Valuation Context

Business Model And Market Position

Bachem Holding AG is a leading global provider of peptide-based active pharmaceutical ingredients (APIs) and oligonucleotides, serving pharmaceutical and biotechnology firms. The company operates in the specialty chemicals sector, focusing on high-purity peptides for therapeutic applications, including oncology, diabetes, and cardiovascular diseases. Bachem’s vertically integrated model spans research-grade production to commercial-scale GMP manufacturing, ensuring end-to-end control over quality and regulatory compliance. Its expertise in complex peptide synthesis positions it as a critical partner for innovators developing next-generation biologics. The company’s market position is reinforced by long-term client relationships and a reputation for reliability in a niche but growing segment. With increasing demand for peptide therapeutics, Bachem benefits from secular trends toward targeted therapies and personalized medicine. Its Swiss-based operations and adherence to stringent regulatory standards further enhance its competitive edge in global markets.

Revenue Profitability And Efficiency

In FY 2024, Bachem reported revenue of CHF 605.3 million, with net income of CHF 120.2 million, reflecting a net margin of approximately 19.9%. The company’s operating cash flow stood at CHF 146.3 million, though significant capital expenditures (CHF 273.8 million) indicate heavy investment in capacity expansion. Diluted EPS of CHF 1.6 underscores efficient earnings conversion despite high reinvestment needs.

Earnings Power And Capital Efficiency

Bachem’s earnings power is driven by its high-margin peptide API business, with robust demand from biopharma clients. The company’s capital efficiency is tempered by its growth-oriented capex, but its low debt (CHF 0.3 million) and strong cash position (CHF 95.2 million) provide flexibility. ROIC metrics are likely favorable given its niche leadership, though exact figures are unavailable.

Balance Sheet And Financial Health

Bachem maintains a conservative balance sheet, with minimal total debt (CHF 0.3 million) and a healthy cash reserve (CHF 95.2 million). Its net cash position supports ongoing investments in production capacity and R&D. The absence of leverage and consistent cash generation underscore financial stability, though capex intensity may pressure short-term liquidity.

Growth Trends And Dividend Policy

Revenue growth is supported by rising peptide therapeutic adoption, with Bachem well-positioned to capitalize on industry trends. The company pays a dividend of CHF 0.85 per share, reflecting a balanced approach to shareholder returns and reinvestment. Future growth will hinge on scaling commercial API production and maintaining technological leadership.

Valuation And Market Expectations

At a market cap of CHF 3.67 billion, Bachem trades at a premium, reflecting its niche leadership and growth potential. A beta of 1.017 suggests market-aligned volatility. Investors likely price in sustained demand for peptide APIs and Bachem’s ability to execute on capacity expansions.

Strategic Advantages And Outlook

Bachem’s strengths lie in its technical expertise, regulatory compliance, and vertical integration. The outlook is positive, driven by biopharma innovation and peptide therapy adoption. Risks include capex execution and competition, but its established client base and Swiss quality standards provide resilience.

Sources

Company filings, market data