MorphoSys Q2 results: Tax items led to small net loss, but well on
track to deliver on new FY 2006 guidance
As we had estimated, revenues fell short of the outstanding Q1
2006 performance. Whereas Q2 revenues were broadly in line
with our forecast, they came in 6% below consensus. Although
the company surprised us by reporting a small net loss in Q2 due
to an exceptional tax item, EBIT was strong, matching Dow Jones
consensus but coming in above our estimate. We see MorphoSys
as well on track to delivering on its new FY guidance, and we see
our investment case confirmed. We would recommend buying
into any potential share price weakness today resulting from the
small net loss booked. There will be a CC at 10 CET.
Q2 sales review. The company reported Q2 sales 1% below our
estimate and 6% below consensus. An observed overall shortfall vs. Q1
(€14.8) was mainly due to lower milestone payments received. In
particular, therapeutic antibody revenue was slightly better than
estimated, whereas research antibody revenues were weaker than
estimated with a number of orders only booked in H2.
Q2 earnings review. Q2 2006 EBIT was in line with consensus but
better than our forecast. Surprisingly, MorphoSys booked a small net
loss due to an exceptional charge for tax accruals as well as a higher
than estimated tax charge. However, we believe that the charge for tax
accruals was a one-time item.
FY 2006 guidance. MorphoSys already increased its FY guidance
yesterday to €52 in revenues (was €50m) and a net income of around
€5m (was €1m). Whereas we are still above new guidance at the
revenue line (WestLB: €57m), it matches JCF consensus. New guidance
on net income is above consensus (€3m), but bodes well for our estimate
of €6m. Looking at the H1 2006 performance, revenues of €26.5m and
net income of €4.5 are well on track to come in at our estimated FY 2006
figures. We believe that if the share price weakens today after the
surprising net loss in Q2, this offers an attractive buying opportunity as
we view the investment case for MorphoSys as intact (increasing number
of partnerships, maturing pipeline of HuCAL-based antibodies,
increasing profitability, takeover speculation). |
