February 15, 2018 / 11:15 AM / 6 months ago

UPDATE 1-Straumann's margin outlook takes shine off revenue surge

(Adds details, analysts’ quotes)

By Sylwia Lasek

Feb 15 (Reuters) - Dental implant maker Straumann said on Thursday it aims for a third straight year of double digit growth in 2018 after reporting annual revenue of more than $1 billion for the first time.

Analysts, however, highlighted concerns over a lack of expected growth in operating margins, saying a failure to convert strong revenue into higher profits could disappoint investors.

Straumann shares were around 1 percent higher after the results, in line with the local index. They have risen more than 65 percent since the start 2017 sending the 12-month forward price-to-earnings ratio to 34.8 percent, well above the 18.4 average for the healthcare equipment industry, according to Thomson Reuters data.

Berenberg analysts in a research note questioned if surging revenue could be translated into the kind of profit growth needed to support the stock’s “eye-watering P/E multiple.”

Straumann’s full-year revenue rose 15.7 percent to 1.11 billion Swiss francs ($1.20 billion), roughly in line with expectations.

The company said it expects revenue in the current year to grow in the low double-digit percentage range.

The operating profit (EBIT) margin reached 25.7 percent, excluding items, in 2017. The company expects the margin to remain stable this year as it plans further expansion.

“EBIT margin outlook is likely to be met with some disappointment, as a margin increase of 70 basis points was expected”, ZKB analyst Sibylle Bischofberger said in a note.

Straumann proposed to increase its 2017 dividend by 0.5 Swiss francs to 4.75 Swiss francs per share.

$1 = 0.9275 Swiss francs Reporting by Sylwia Lasek and additional reporting by Thyagaraju Adinarayan; Editing by Sherry Jacob-Phillips and Kirsten Donovan

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