Lonza Shares Surge on Robust Results and Upbeat Guidance

Lonza US54338V1017

Investors in Lonza Group AG were met with a strong set of full-year results and an ambitious outlook, sending the company's shares higher. The Swiss contract development and manufacturing organization (CDMO) reported significant growth for 2025 and provided confident guidance for the coming year, alongside a proposed substantial increase in shareholder returns.

For the 2025 fiscal year, Lonza achieved sales of CHF 6.5 billion. This represents an increase of 21.7% on a constant exchange rate (CER) basis. The company's CORE-EBITDA reached CHF 2.1 billion, with the corresponding margin expanding by 1.4 percentage points to 31.6%. Management attributed this performance to the successful conclusion of development projects, solid operational execution, and leveraging effects across its network.

Looking ahead to 2026, the company forecasts sales growth in the range of 11% to 12% (CER). It also anticipates its CORE-EBITDA margin will exceed 32%. This optimistic projection signals management's belief in sustained demand within the biopharma outsourcing sector.

Capital Allocation and Strategic Focus

In a move highlighting its financial strength and confidence, Lonza's Board of Directors has proposed a dividend of CHF 5.00 per share for shareholder approval. This marks a 25% increase compared to the previous year and is subject to a vote at the upcoming Annual General Meeting.

Strategically, the company is progressing with negotiations for the divestment of its Capsules & Health Ingredients (CHI) division. This planned sale is intended to sharpen Lonza's focus on its core CDMO business. Furthermore, the company has secured a fifth major commercial contract for its Vacaville, California facility, underscoring ongoing commercial momentum.

Market Response and Positioning

Lonza's American Depositary Receipts (ADRs) reacted positively to the news, advancing 2.6% to open at $72.76. This price level is near the stock's 52-week high of $73.85 and remains positioned clearly above both its 50-day and 200-day moving averages.

While short interest in the stock saw a notable 393% jump in January to 27,701 shares, the overall level remains low. With an average daily trading volume of 75,219 shares, the short-interest ratio stands at just 0.4 days. The current price action suggests that, for now, the positive fundamental news is outweighing the build-up in bearish bets.

Key Upcoming Catalysts

The confirmation of Lonza's positive trajectory now hinges on several near-term factors. Successful execution of the 2026 guidance, the conclusion of the CHI divestment process, and the continued expansion of commercial contracts like the one in Vacaville will be closely watched. Additionally, the shareholder vote on the increased dividend at the next AGM presents a key immediate event for the equity's valuation.