$STVN: are oral GLP-1s really a death blow? | Aurelian Research's Leo Trudel

Summary

• Aurelian Research’s Leo Trudel argues the oral-GLP-1 selloff in Stevanato (STVN)—down ~50% from its high—is another overreaction in the stock’s recurring cycle. It IPO’d in 2021 on the COVID vaccine-vial boom to ~$33, crashed 30-40% on destocking, recovered by end-2024/early-2025, and is now being punished on fears the injectable-to-pill shift guts demand. “Every time there’s news, it ends up coming back.”
• The differentiated part of the thesis is mix shift, not heroic growth: nearly half of revenue is “high-value solutions”—pre-sterilized, ready-to-fill biologics containment at roughly twice the gross margin—growing 15-18%, while the other half grows ~2%. Continued mix shift contributes about 1.2 points of EBITDA margin expansion, from 25% toward 30-32% in five years; layered on the capex cycle turning into free cash flow, Trudel models an 18.6% EBITDA CAGR.
• On orals, Trudel’s input from an IQVIA researcher and his own doctor says oral GLP-1s are currently about half as effective and “will never match” injectables, because the injectable can carry ~70 times more potent molecule. Severe type-2 diabetes and morbid obesity favor injectables, while older patients in retirement homes may struggle with empty-stomach daily dosing. Only 10% of the addressable population was treated as of 2025, so Trudel believes injectables can keep growing even as orals take share.
• Walker’s pushback is the capacity trap, not just share loss: STVN plowed years of free cash flow into plants built for “unlimited demand,” and customer forecasts aren’t take-or-pay—“you’ve got visibility until it’s not.” Trudel counters that the buildout served all biologics (60% of new-drug R&D), the company is still capacity constrained, and a family running the business since 1949 has seen blockbuster cycles before.
• Trudel’s stress test: assume half of GLP-1 goes away and the stock still trades ~14-15x EBITDA, below its prior 20x EBITDA valuation (~40x free cash flow on a good non-capex-cycle year)—so the fall from $25-27 to $15 overshoots. His honest risk flag: “even if you end up being right,” every new oral headline hits the stock, an overhang with no event angle to clear it.
• The moat is being “spec’d in”—pharma patents the containment system alongside the molecule, typically qualifying two suppliers, and switching later means redoing years and millions of R&D. Walker’s skepticism from years covering the space: every player promises to win a competitive tech transfer—“if you can win it, they can win it”—though Trudel says Stevanato has not said it lost large contracts since its IPO, and that volume guidance is the risk that actually moves the stock.
• When Andrew asks Trudel whether he would buy it, Trudel says no—there is no distress or event angle and no differentiation at 12-14x EBITDA. Walker likewise views it as a fine compounding, Excel-spreadsheet-type business, but not his style or skill set; his earlier math suggested an 8-12% five-year IRR rather than screaming risk-adjusted alpha.

Deep dive

1. Same stock, repeated overreactions: COVID vials, destocking, now oral GLP-1s

• Trudel’s setup: Stevanato makes containment and delivery systems—glass vials, cartridges, syringes—for 23 of the 24 largest pharma companies (Lilly, Novo Nordisk, Pfizer, Moderna), and has been “one of the best love stories by fund managers over the last 4-5 years”: recurring revenue, 5-10 years of visibility, margin expansion, biologics tailwinds—“so easy to pitch to your PM” that it’s typically one of the biggest holdings in many North American small-cap funds. He owns it personally and at Aurelian.
• The pattern both agree on: 2021 IPO into the vaccine boom to ~$30-33, a 30-40% destocking crash as Pfizer-type customers worked off pandemic over-orders, recovery by end-2024/early-2025, and now a ~50% drawdown on oral-GLP-1 fear. Trudel: “the stock often moves way too much, basically… every time there’s news, it ends up coming back.”

2. The alpha claim: mix shift plus a free-cash-flow inflection

• Walker’s opening challenge: at 11-13x EBITDA and high-single-digit growth guided for 2026, his mental math—later framed around roughly 20x free cash flow—gets to “an 8 to 12%” annualized five-year IRR, which is attractive but “not really screaming risk-adjusted alpha.”
• Trudel’s two missing pieces: first, the mix shift—high-value solutions (pre-sterilized, ready-to-be-filled, “the only one that works with biologics”) carry twice the gross margin, are almost half of revenue growing 15-18% versus ~2% for the rest, and contribute about 1.2 points of EBITDA margin expansion “without cutting any costs,” from 25% toward maybe 30-32% in five years. Second, hundreds of millions of capex into new plants, including Fisher in the U.S. and Italy, is turning into free cash flow. His model: an 18.6% EBITDA CAGR.
• Trudel also notes that the current capex cycle depresses cash conversion: on a good year without a capex cycle, roughly half of EBITDA converts to cash, which had implied a roughly 40x multiple on actual cash at the former 20x EBITDA valuation.
• Notable epistemics: he distrusts most margin-expansion pitches—“it happens half of the time”—but likes this one precisely because it requires no restructuring, only continuation of the biologics mix.

3. Orals vs. injectables: the effectiveness gap is the whole debate

• Walker’s sharpest analogy: if a version-two cancer drug is “better in every way, shape, and form, it doesn’t matter that the market’s going from 10 to 100,000 because everybody’s taking version two”—so why wouldn’t orals reach 95-100% GLP-1 share within 18-30 months?
• Trudel’s answer, based on an IQVIA researcher, his own doctor and his research: orals are about half as effective and “will never match” injectables, since the injectable can carry ~70 times more potent molecule. The emerging protocol is to start normal patients on an injectable and use the oral as maintenance treatment; severe type-2 diabetes and morbid obesity favor injectables; and older patients in retirement homes may have difficulty with empty-stomach daily dosing, where “if you forget it once or twice, the effectiveness goes almost to zero.”
• The demand math: only 10% of the addressable GLP-1 population was treated as of 2025, so even heavy oral share gains could leave injectable growth intact. Walker recalls, with uncertainty, recent-call commentary of GLP-1 growth of “over 20% or something” in FY25 and, “if I remember correctly,” mid-teens growth even with orals.

4. Overbuilt or capacity constrained—and how real is “spec’d in”?

• Walker’s structural worry: the capex cycle was kicked off for what he characterized as “unlimited GLP-1 demand,” yet customer forecasts are “not firm contracts where they’re take-or-pay… you’ve got visibility until it’s not.” His cautionary pattern from being a cable bull: fiber went “from it’s not impacting, to a small impact, to a big impact—it kind of turned out the market was right there.”
• Trudel’s rebuttal: the buildout served all biologics. The other half of the biologics market has compounded 15-18% for five years, 60% of global new-drug R&D is biologics, and peptides are coming; the company is still capacity constrained. Plus a trust argument: the business was founded in 1949 by the Seven Arcs family and is now run by Franco Seven Arcs; “I would be surprised if they made this massive mistake.” Walker, dryly: “they would not be the first family-controlled company that kind of struck oil” in 2022.
• On the moat: drugs are developed with their containment and delivery system, typically using two qualified suppliers, and switching post-launch means redoing years and millions of R&D—but Walker’s long-held tension stands: every player promises a competitive tech-transfer win, and “if you can win it, then they can win it.” Trudel’s grounded reply: Stevanato has not said it lost large contracts since its IPO; what matters more is back-end demand and volume guidance.
• Trudel’s downside math and concession: assume half of GLP-1 goes away and STVN still trades ~14-15x EBITDA, below its prior 20x—but “even if you end up being right… the market is still scared of every piece of news.”

5. Capital returns, a consolidation dead end—and the closing “no”

• Capital allocation ahead: a mix of bolt-on M&A and buybacks, with buybacks likely prominent “when the stock overreacts”; the dividend stays token (~0.4%, “just to pay the family”). On consolidation after Novo took out Catalent: four-to-five players run the industry (West Pharma, Stevanato, Schott, Gerresheimer, Vetter), a West-buys-Stevanato deal would face regulatory issues because two or three of these companies need to be on a drug, and Stevanato has favored new plants over smaller acquisitions because the plants offered better returns.
• Sidebar on AI workflows: Trudel downloads every company transcript into Claude or an AI chat tool to test whether “management is always pitching dreams” against what actually happened—three-hour track-record checks in 3-5 minutes; Walker uses it for guidance hit-rate audits, proxy reviews, and increasingly iterative idea generation.
• The closing question: when Andrew asks whether Trudel would buy it, Trudel says, “No… there is no distress angle, there is no event angle. I don’t know where I’m really differentiated” at 12-14x EBITDA. Walker agrees that it is a fine compounding, Excel-spreadsheet-type business but not his style. Trudel concedes: “it’s not the real value type of distress situation, for sure.”