Straumann leaps as Q3 sales top estimates despite China weakness

Investing.com -- Straumann shares jumped more than 6% Wednesday after the Swiss dental implant maker reported a stronger-than-expected 8.3% increase in third-quarter organic sales, supported by robust growth in North America and most Asia-Pacific markets, which offset weaker demand in China.

Revenue rose to 602.2 million Swiss francs ($759.3 million) for the July–September period, slightly ahead of the 600.6 million francs forecast in a Vara consensus. 

Sales in the Asia-Pacific (APAC) region reached 144.3 million francs, short of expectations of 151.5 million, as the company cited softer demand in China. Straumann said Chinese patients are delaying dental treatments while distributors are reducing inventories ahead of the next round of the country’s volume-based procurement program.

The company warned that market conditions in China could remain difficult over the next two quarters but voiced confidence in continued strength in other regions.

North American (NA) sales totaled 161.6 million francs, slightly ahead of the estimates of 159.6 million. The company said premium and challenger brands continued to gain market share, supported by improved commercial execution.

"As expected APAC, and notably China destocking is the core dissonant reporting, but all other geographies beat estimates in CHF and CER terms," Stifel analyst Dylan Van Haaften said. 

"We expect stock reaction to signal some relief, as China weakness is indicated to be transient (Shanghai campus manufacturing at full production), and NA patient flow is showing some signs of improvement."

Morgan Stanley analyst Aisyah Noor voiced a more cautious tone, saying that the "APAC miss implies weaker Q4" for Straumann.

"Assuming the decline began in September, we think this implies anywhere between -20% to -40% decline in China in September; extending this to Q4 implies APAC could be down >10% in Q4, vs cons +5%. We see some downside to consensus 2025 numbers."

Straumann also announced a shift in its orthodontics operations, transferring clear aligner manufacturing for the EMEA and Asia-Pacific regions to its Chinese partner Smartee.

The company reaffirmed its full-year guidance, saying it continues to expect high single-digit organic revenue growth in 2025.