Danish company Ambu is the world’s leading manufacturer of single-use endoscopes. Traditionally, gastrointestinal and urological endoscopies have been performed with reusable devices that are washed between uses. Ambu, on the other hand, has launched a single-use alternative that is more cost-effective and hygienic.
The market for single-use endoscopes is currently around USD 500 million per year and is expected to grow to USD 2.5 billion by 2024 as single-use devices gain market share from reusable ones. In this sense, the company has many similarities with the highly interesting Revenio, which also benefits from a situation where a better technical solution displaces an older one.
Much like in the case of Revenio, there were news that competing measurement technology had caused coronavirus infections. Similarly, there have been concerns about the risk of infection with reusable endoscopes. The coronavirus crisis has indeed accelerated the demand for Ambu’s endoscopes even more rapidly.
Currently, there is practically one significant competitor in the market, the American company Boston Scientific. The market is so large that there is room for both, and Handelsbanken, at least, estimates that competition is primarily good as it accelerates the development of the entire market and the shift to single-use products.
Ambu also has two other business areas (Anesthesia and Patient Monitoring), but the most interesting segment is the visualization segment, which manufactures single-use endoscopes. Ambu’s other segments have suffered somewhat from the coronavirus crisis as non-urgent surgeries have been postponed. In the long run, these are also in growing industries.
The company has a somewhat unusual fiscal year ending in September. For the next fiscal year 2020/21, revenue growth is expected to be 16%, but accelerating thereafter to 24% in the 21/22 fiscal year. For the fiscal year 20/21, EV/sales is 11.6x and EV/EBITDA is 63.2x.
The stock’s valuation multiples are therefore high, but the outlook is very attractive. The share price at the time of writing is DKK 193.5.
More information and the company’s presentation can be found here: