Sartorius (SRTGR; NR, BBB S) {SRT GR Equity} 1Q24 Earnings

Our view on cash lines are tad more bearish after earnings call comments with mgmt indicating acquisitions even this year were possible & seemed to imply low 3x's on leverage was satisfactory as a target (vs. stated 2-3x). We don't see issues with the 26's but further out lines do not screen cheap to us here given uncertainty ahead.

• Equities including its 70% owned subsidiary {DIM FP Equity} are heading for a rough close - its not coming from highs & its fall did have flow through to lab services/equipment sector; {BIO US Equity} {BRKR US Equity} {WAT US Equity} {TMO US Equity}
• Cash lines are more mute +5-6bps wider - moves we were fine with this morning but earnings call comments did flash red for us. As we mentioned operating performance recovery this year remains at the peril of mgmt guidance playing out - analyst (large coverage) was in line with it heading into earnings.
• Leverage moved in the right direction & guidance for it in the low 3x's by year end is firm/better than previous guidance (for 4x). Our concern is M&A - tone in Q&A seemed to indicate appetite is there even this year - likely to see rating pressure if it does. It also said its happy with leverage target...slightly above 3 (current ratings were against target 2-3x) & also indicated deleveraging would be without any additional capital measures (i.e. equity raises).
• The 26s still screen fair to cheap on a liquidity play; its buffed up cash now at €1b after equity raises & is against €300m in current liabilities. We see ~€500m in debt ahead of the 26's - most in SSD's.