By Silvano Grimaldi, CEO of the independent asset management firm Grimaldi & Partners AG.
Monthly Review
International equity markets ended March 2024 with gains.
Driving Factors
- Expectations of interest-rate cuts despite the resilient US economy
- Resilient economic conditions in the United States and Europe
Stock in Focus
Lonza Shares Rise Strongly Following Positive Analyst Commentary
Lonza shares benefited significantly from positive analyst commentary.
Following price-target increases from Barclays and Vontobel, JPMorgan also raised its target, while an upgrade from Deutsche Bank provided further momentum.
The upward trend in Lonza shares therefore continued following the publication of the company’s annual results.
Analysts at Barclays and Vontobel had already expressed positive views.
According to Barclays analyst Charles Pitman, the outlook for the pharmaceutical supplier was beginning to improve.
Vontobel also identified the search for a new CEO as a key issue for the coming months.
Former CEO Pierre-Alain Ruffieux left the company at the end of September. Since then, Chairman Albert Baehny has been managing the company on an interim basis for the second time.
Both Barclays and Vontobel maintained their buy recommendations.
JPMorgan subsequently raised its price target to CHF 500, while maintaining its positive rating.
Deutsche Bank also joined the group of supporters by upgrading Lonza from “Hold” to “Buy.”
Analyst Falko Friedrichs expressed confidence following the confirmation of Lonza’s targets for both 2024 and the medium term.
Lonza remains well positioned within the structurally growing market for outsourced pharmaceutical manufacturing, while the valuation of its shares was also considered attractive.
Friedrichs also expects the appointment of a new CEO to provide positive momentum following several challenging years.
Outlook – April 2024
Key Market Factors
The decline in inflation was one of the most important drivers of the positive performance of equity markets during the previous year.
For the current year, a central theme is the expected interest-rate cuts by major central banks.
Markets anticipated three interest-rate cuts from the Federal Reserve during 2024.
A disappointment in these expectations could negatively affect the continued rise in equity markets.
Federal Reserve Chairman Jerome Powell maintained the projection of three policy-rate cuts during the central bank’s March meeting.
However, it remained uncertain whether the first cut would take place in June.
Overall, the outlook for equity markets therefore remained positive.
Performance Expectations
For April 2024, we expect a sideways trend, without significant gains or losses by the end of the month.
Stock Recommendation: Lonza
This publication is provided for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any financial instrument. Past performance is not indicative of future results.
