Concentration on isotopes: Price rally at Eckert & Ziegler: What to expect from the Eckert & Ziegler share | message
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by Klaus Schachinger, Euro am Sonntag
Radiopharmaceuticals – this is the new magic word at Eckert & Ziegler, the specialists in therapies for irradiating tumors with the help of radioactive substances (isotopes). Patients are injected with radioactive substances for diagnosis – a rapidly growing business that the company wants to focus on.
In a first step, Eckert & Ziegler is transferring 51 percent of the shares in the tumor radiation equipment (HDR) business to the Chinese company TCL Healthcare Equipment. The responsible subsidiary, Bebig Medical, had sales of around eleven million euros in 2019. The devices will also be manufactured in Germany after the partner has joined the company. The Berlin-based company justifies the deal, however, as the growth market is in Asia, especially in China.
By early 2024, TCL Healthcare, a provider of diagnostic imaging equipment, can acquire the remaining 49 percent of the shares at a price that has already been set. After the deadline, Eckert & Ziegler has a put option to TCL. The amount of the offer is then determined.
Enormous global potential
Meanwhile, the Berlin-based company is pooling its management and balance sheet resources for the radiopharmaceuticals business. The corresponding division delivers 47 percent of sales. Therapies for the treatment of tumors with isotopes from the Eckert & Ziegler portfolio, such as gallium-68, lutetium-177 and yttrium-90, provide around 70 percent of global nuclear medicine revenues.
In 2019, one billion dollars was sold worldwide in this special market. Over the next ten years, the proceeds are expected to multiply to 30 billion. The company, led by co-founder Andreas Eckert, is one of the few companies in the world that has the necessary certificates and approvals for the production of radioactive isotopes and for nuclear engineering processes.
Expansion in America and China
This puts the company in a particularly promising position in this growth market. In addition, Eckert & Ziegler is expanding its capacities for radiopharmaceuticals worldwide. In China, 50 million euros are being invested in a plant for the production of isotopes, which is scheduled to go into operation in 2027. In Boston, Massachusetts, the plant is being expanded to include a facility for manufacturing radiopharmaceuticals for large pharmaceutical companies. The start of production is planned for the end of the year. Preparations for the treatment of liver cancer based on the yttrium-90 isotope are currently being manufactured there. In the future, Lutetium-177 pharmaceuticals, an active ingredient for the treatment of various tumors, are also to be supplied from Boston.
Strong earnings growth
A few days ago, the family company presented its results for the 2020 financial year. With 176.1 million euros, Berliners earned slightly less in 2020 than in the previous year. However, the margins improved. The annual profit of 22.9 million euros was above the 22 million for 2019.
In the current financial year, the surplus is expected to grow disproportionately by 26 percent to 29 million euros, assuming the income remains the same. Despite this considerable increase, the share is valued ambitiously. In view of the long-term good prospects for Berliners, however, investors accept the high valuation. The price continued to rise after the balance sheet.
All time high: Despite the high valuation, the share price reached recently set a new record. The prospects remain good.
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Image sources: Eckert & Ziegler