BioGaia AB (publ) (BIOG-B.ST) fair value

ACCE thesis

BioGaia makes probiotic products, principally Lactobacillus reuteri strains sold as drops and tablets for infant colic, gut health and oral health, and it sells them largely through pharmacies and retail channels across Europe and beyond. Its moat rests on clinical data and branded strains that generics cannot easily copy, which shows up in a 73.0% gross margin and a 28.4% operating margin. Revenue growth of 8.9% is steady rather than explosive, so the case depends on sustaining that pace while margins hold. The stock trades at 37.7 times trailing earnings and 29.9 times forward, a premium that assumes the franchise keeps compounding. A ROE of 30.8% says the business earns well on the capital it uses, which makes the question for a deeper look whether that growth and margin profile can persist long enough to justify the multiple.