The shares of LEONTEQ, the leading provider of structured investment products, are holding up well. Will the next fundamental movement lift the share above the CHF 70 mark? In any case, the course of business has not disappointed so far, and - depending on the stock market environment - the case for new highs is quite clear.
LEONTEQ experienced considerable difficulties on the stock market at the height of the Corona distortions. Oil futures were trading below zero and many financial stocks were not allowed to pay dividends. A profitable business was practically impossible and the stock fell into a bottomless pit. This collapse is unlikely to be repeated again, just because of the stock market; the lessons have been learned. LEONTEQ has clearly demonstrated during the last months that its business model is successful, promising and potential. The company has long since laid the foundation for new highs; perhaps even for the all-time high of around CHF 230 from 2015? The latter is probably a bit too utopian and more likely to be wishful thinking. LEONTEQ is benefiting from digitalization and online applications and can also impress with record results in this area. LEONTEQ's products are considered innovative, modern and they are becoming increasingly well-known. The product range also includes the increasingly popular crypto assets. The macroeconomic environment, which is expected to be more volatile, plus rising inflation with rising interest rates, greatly favor LEONTEQ's starting position. The CEO, Lukas Ruflin, also promises to share the dividend with up to 50% of the profit. This would mean that the payout would be considerably higherthan the last payout of CHF 0.75. With earnings per share estimated at around CHF 7 for 2021, the leeway is quite large. In addition, the valuation is "tantalizingly" low with a 2021 P/E of around 9.5x. All in all, our price target of CHF 85 could even be much too low!
