Sartorius AG and Sartorius Stedim: 2023 Reset Period Steepening

Management at wide-moat companies Sartorius AG and its bioprocessing subsidiary Sartorius Stedim significantly reduced 2023 guidance, as demand for their life science tools have softened in the wake of small biopharmaceutical funding concerns, general macroeconomic uncertainty, and tough comparable periods in which some purchases may have been pulled forward. Considering those factors, we have significantly reduced our near-term assumptions and are reducing our fair value estimates on both companies by the mid-single digits on a percentage basis. While shares of both firms were trading in roughly fair territory prior to this announcement, we suspect they may decline substantially on this news. If shares wind up trading at significant discounts to our new fair values, we think investors with a long-term horizon may see such weakness as an opportunity to obtain shares in these growth companies at reasonable prices.