生命科学与诊断工具：VOVID-19来自管理层会议的反馈

1、18 March 2020Global ResearchLife Sciences & Diagnostic ToolsCOVID-19: Feedback From Our Management CallsEquitiesAmericasHealthcareWe Caught up with Managements from -14 Covered Companies on COVID-19Over the last 1.5 weeks, we spoke with management (largely IR) and reviewed a series of COVID-19 topic

2、s, including: impact thus far (across demand, supply, other), the outlook from COVID-19 over the next 1-2 quarters, any prior periods to evaluate as a predicate for this one, and actions being taken. See our recent report (here) which provided an assessment of downside risks to our coverage. With th

3、e COVID-19 situation being a rapidly evolving / fluid one, current trends and outlook can look quite different even vs. the situation 1-2 weeks ago (here). We look forward to keeping abreast of these rapidly changing dynamics and assessing the impact, with UBS, Healthcare teams ongoing expert calls

4、providing useful insight in this regard.Feedback from Tools & DxThe majority of Tools companies did not guide for COVID-19, with the exception of A & MTD, plus PKI pre-announced due to COVID-19 and TMO indicated 1H is tracking below plan. Our management conversations suggested as of our calls compan

5、ies largely have not seen meaningful disruption to supply chains, and China is slowly returning to normal. The COVID impact ex-China can be meaningful, though specific updates were not provided. For companies with COVID-19 direct testing exposure (TMO, DHR, HOLX), revenues here can help mitigate the

6、 negative impacts elsewhere. Companies we profile inside: A, AVTR, BRKR, DHR, EXAS, HOLX, ILMN, MTD, TMO.Feedback from Pharma ServicesSeveral CROs (IQV, ICLR, SYNH and PPD) included China COVID impact in 1Q guidance though the impact ex-China is not reflected. Our calls with management indicate the

7、clinical trial disruption outside of China is very possible (diligence and reports since our calls reveal this is occurring), with each company working to utilize tools for virtual trials to help mitigate the impact. Pre-clinical trial activity appears less disrupted; CRL noted that it*s not seeing

8、issues in RMS supply, though there demand can be impacted if clients cannot make it to sites. CRO managements were clear to point out its nearly impossible to forecast what will happen given the unprecedented nature of the virus/global reaction. Companies we profile inside: CRL, CTLT, ICLR, IQVK, SY

9、NH.Dan Brennan, CFA Analyst +1-212-713 2317John Sourbeer Analyst + 1-212-713-7983Nathan Trey beck Associate Analyst +1-212-713 2392This report has been prepared by UBS Securities LLC. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 17. UBS does and seeks to do business with companies co

10、vered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.ICONWe hosted a virtual investor bre

11、akfast meeting with ICONS CFO and IR on March 11th. Management notes that a reduction in doctor visits (as a result of COVID) would impact ICLRs ability to recruit studies. The company felt a couple weeks of disruption would be manageable (with clearly a worse outlook as of today). Management did no

12、t believe ifs accurate to utilize the assumed China impact in 1Q (-$4-7M revenue impact) as an analog for ex-China potential impact given the significant differences in how the China government responded.The company has been focusing on virtual trials as a mitigating factor to a negative COVID impac

13、t, though does not expect this to be a complete offset in the event of a material reduction in patient volumes. The companys prior Symphony acquisition provides ICLR with virtual trial capability. Not surprisingly, interest amongst sponsors has picked up considerably. Its too early to quantify what

14、impact can occur from COVID and how much virtual trials could help.From a customer perspective, as of the time of our call, ICLR noted that it hasnt seen significant changes in how customers are conducting business and hadnt noted any change in RFP volumes.With regard to capital deployment, manageme

15、nt will continue with opportunistic share repurchases and has been active YTD; M&A remains the key focus for capital deployment and the company remains open to larger transactions, though these require very strong logic/rationale.IlluminaWe spoke with IR on March 10th. ILMN has not included any COVI

16、D-19 impact in guidance. As of our call there has been no impact on the supply chain in China and ILMN has seen some activity beginning to return in China. Prior to COVID, ILMN was guiding 15% growth in China.There has been some disruption on the clinical side in China from NIPT testing not occurrin

17、g as expected as mothers have not visited the hospital. There could be further impact to consumables if researchers are unable to access labs partly offset but some additional research by a few labs on research on COVID.Commentary on potential impact to US/EU research demand was limited, though sinc

18、e our call, diligence with US academic labs indicates a broad based shut down is occurring (however spending in some cases is expected to largely continue). See here.Large POPSEQ projects could see disruption from both sample collection and sequencing as researchers may be unable to access labs. Fur

19、ther, it is unclear what impact the disruption will have at the FDA and approval process for sequencing to begin. Since our call, on March 16, it was announced the All of Us program in the US is suspending all appointments and events (no clinic appointments to provide physical measurements and to su

20、pply biosamples; no community events).Management also provided a brief update on the legal action with BGI and potential patient infringements. ILMN*s two PI cases have now been combined and while no date has been set ILMN expects a judge to grant or deny the motion by early 3Q with a potential tria

21、l in 2021.IQVIAWe caught up with an IR representative on March 10th. IQV during its 4Q earnings guided for ($25M) 1Q revenue impact from China and surrounding countries only (which the company did not expect to make up in remaining quarters. APAC in total is 20% of revenues with 2% of sites in China

22、. The company noted that the impact in China was more severe due to China being more heavily weighted towards hospitals vs. ROW. The company did note that some individuals participating in trials are severely or terminally ill and they have a responsibility to finish the trial even with COVID disrup

23、tion.IQV highlighted that as the disruption becomes more widespread they have remote monitoring in place that CRAs can use to monitor trials. Virtual trial technology has made advances with new technologies to improve monitoring and IQV views that it is in a better position now than a few years ago

24、and noted smaller trials with a limited number of patients have a higher probability of going virtual than larger trials with 1K patients. Further, they could move site locations to further mitigate disruption.On the supply side getting pharmaceuticals to patients has not been an issue at the time o

25、f our call, with management proactively tracking the issue. Further, IQV management was confident that pharma would insure supply, so that sick patients stay to protocol.On the corporate side, IQV is taking safety precautions such as limiting trials and have certain employees wear mask and other pro

26、tective gear. IQV reiterated its previous comments of capital deployment of $1B of repurchases and $500 M of M&A.On pharma financing IQV believes that emerging pharma remains stable at the time of our call and noted that large pharma represents a much larger portion of total revenues on a dollar bas

27、is but did not break out the percentage.METTLER TOLEDOWe spoke with IR on March 11th. MTD at the time of the 4Q19 release included an impact in guidance for COVID-19, namely a negative (2%) impact to 1Q organic growth (China down 5-10%), which assumed China returns to work on Monday (2/10) though re

28、turn is gradual (with many working from home, travel/face-to-face interaction limited, productivity hampered).On our call, MTD highlighted that China is back to work, though there have been some logistical challenges. In terms of MTDs China production: the company feels good, with production capacit

29、y back to 100%, citing the very experienced work force enabling the successful ramp back up. The company has been working closely with suppliers.Assessing the trajectory of China demand is more difficult to assess. Consistent with guidance, March will be a key month to see how much MTD can recover f

30、rom a challenging February. The diversity of MTDs customers base in China helps as does a strong tele sales channel. MTD highlighted there could be some stimulus in China that could help as the year plays out.Ex-China, MTD is monitoring the situation closely and has not included any COVID- 19 impact

31、 in guidance. If the disruption remains there could be a meaningful impact on Europe operations which may not be able to handle the disruption as well as the Americas. MTD views that its core industrial is much stronger today than it was in the 2008/09 recession and represents 25% today vs.30% in 08

32、. Further the focus on *high growth core markets* has overall industrial less susceptible to recession. The energy end market represents 6% above the MRA.44%32%NeutralFSR is between -6% and 6% of the MRA.41%29%SellFSR is 6% below the MRA.15%20%Short-Term RatingDefinitionCoverage3IB Services4BuyStock

33、 price expected to rise within three months from the time the rating was assigned because of a specific catalyst or event.1%1%SellStock price expected to fall within three months from the time the rating was assigned because of a specific catalyst or event.1%1%Source: UBS. Rating allocations are as

34、of 31 December 2019.1 Percentage of companies under coverage globally within the 12-month rating category.2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months.3:Percentage of companies under coverage globally

35、 within the Short-Term rating category.4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided within the past 12 months.KEY DEFINITIONS:Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross divide

36、nd yield over the next 12 months. In some cases, this yield may be based on accrued dividends. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of, the equity risk premium). Under Review (UR) Stocks may be flagged as UR by

37、the analyst, indicating that the stocks price target and/or rating are subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation. Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do

38、 not reflect any change in the fundamental view or investment case. Equity Price Targets have an investment horizon of 12 months.EXCEPTIONS AND SPECIAL CASES:UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management, performance record, disco

39、unt; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell: Negative on factors such as structure, management, performance record, discount. Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review Committee

40、 (IRC). Factors considered by the IRC include the stocks volatility and the credit spread of the respective companys debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating. When such exceptions apply, they will be identified

41、in the Company Disclosures table in the relevant research piece.Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are not registered/qualified as research analysts with FINRA. Such analysts may not be associated persons of UBS Securities LLC

42、 and therefore are not subject to the FINRA restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any, follows.UBS Securit

43、ies LLC: Dan Brennan, CFA; John Sourbeer; Nathan Treybeck.Company DisclosuresCompany NameReuters12-month ratingShort-term ratingPricePrice dateAgilent Technologies Inc716A.NNeutralN/AUS$70.4417 Mar 2020Avantor Inc2 4 5 16AVTR.NBuyN/AUS$10.0117 Mar 2020Bruker Corp16BRKR.ONeutralN/AUS$35.0317 Mar 2020

44、Catalent Inc2 4 5-6-16CTLT.NBuyN/AUS$42.9117 Mar 2020Charles River Laboratories International16CRL.NNeutralN/AUS$112.0017 Mar 2020Danaher Corp16DHR.NBuyN/AUS$131.7817 Mar 2020Exact Sciences Corp1316EXAS.OBuyN/AUS$42.4717 Mar 2020Fluidigm Corp4-616-20FLDM.OBuy (CBE)N/AUS$2.2817 Mar 2020Hologic Inc416

45、HOLX.ONeutralN/AUS$31.4717 Mar 2020ICON Plc16ICLR.ONeutralN/AUS$132.4017 Mar 2020Illumina Inc16ILMN.OBuyN/AUS$225.7617 Mar 2020IQVIA Holdings Inc716IQV.NBuyN/AUS$107.6917 Mar 2020Mettler-Toledo International Inc16MTD.NNeutralN/AUS$682.4917 Mar 2020NanoString Technologies Inc214-5*6116NSTG.OBuyN/AUS$

46、19.7217 Mar 2020PerkinElmer Inc16PKI.NNeutralN/AUS$67,1117 Mar 2020PPD Inc2PPD.OBuyN/AUS$17,8717 Mar 2020PRA Health Sciences Inc16PRAH.ONeutralN/AUS$79.7717 Mar 2020Qiagen NV16QGEN.NNeutralN/AUS$38,2517 Mar 2020Syneos Health Inc16SYNH.ONeutralN/AUS$42.4017 Mar 2020Thermo Fisher Scientific Inc716TMO.

47、NBuyN/AUS$296.3117 Mar 2020Waters Corp16WAT.NNeutralN/AUS$183.2717 Mar 2020Source: UBS. All prices as of local market close.Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing dateUBS AG, its affiliates or subsidiaries has

48、 acted as manager/co-manager in the underwriting or placement of securities of this company/entity or one of its affiliates within the past 12 months.Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking services from this company/entity o

49、r one of its affiliates.UBS AG, its affiliates or subsidiaries expect to receive or intend to seek compensation for investment banking services from this company/entity within the next three months.This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and inv

50、estment banking services are being, or have been, provided.Within the past 12 months, UBS Securities LLC and/or its affiliates have received compensation for products and services other than investment banking services from this company/entity.13. UBS AG, its affiliates or subsidiaries beneficially

51、owned 1% or more of a class of this companys common equity securities as of last months end (or the prior months end if this report is dated less than 10 days after the most recent months end).16.UBS Securities LLC makes a market in the securities and/or ADRs of this company.20.Because this security

52、 exhibits higher-than-average volatility, the FSR has been set at 15% above the MRA for a Buyrating, and at -15% below the MRA for a Sell rating (compared with 6/-6% under the normal rating system).Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this re

53、port. For a complete set of disclosure statements associated with the companies discussed in this report, including information on valuation and risk, please contact UBS Securities LLC, 1285 Avenue of Americas, New York, NY 10019, USA, Attention: Investment Research.Company Conversation HighlightsAg

54、ilentAgilent was one of the few Tools companies to include an impact from COVID-19 in guidance. We caught up with IR on March 6th (earlier than other companies in this note). From a demand perspective, feedback suggested China revenue trends were ie line with the guidance offered, which assumed a we

55、ak February, with subsequent strengthening in March and April. Customer feedback in China was encouraging with regard to instrument demand to keep up with volume increases.The company believes that it has cost levers to pull if the outlook deteriorates.Beyond COVID-19, we were reminded that on NASD

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