When the stock market gets it wrong: Schott Pharma clears its name; Lahontan Gold and Instone are the next candidates

Schott Pharma: Unfairly tainted by association

On the stock market, companies often pay the price for the mistakes of others. Schott Pharma’s shareholders know this all too well. A year ago, incorrectly booked revenue at competitor Gerresheimer came to light, and financial regulator BaFin intervened. A series of profit warnings and losses followed. By the end of February this year, Gerresheimer’s share price had fallen from over EUR 120 to a 15-year low of below EUR 15. At almost the same time, Schott Pharma hit its all-time low of EUR 12.62 in March. Admittedly, the pharmaceutical packaging manufacturer had itself disappointed because a major customer took delivery of fewer glass syringes than expected. However, the Mainz-based company was far removed from any scandal.

The latest figures amounted to an acquittal from guilt by association. In July, Schott Pharma reached an agreement with the major customer and raised its guidance. Currency-adjusted growth of 5 to 6% is now expected for the recently ended 2025/26 financial year, taking revenue past the EUR 1 billion mark for the first time. In the third quarter, revenue rose 8.3%, while analysts expected only 3.5%. CEO Christian Mias points to “persistently high demand for prefillable glass syringes for GLP-1 drugs”, mainly used for weight-loss and diabetes treatments. Since the start of the year, the share price has risen about 70% and now stands at EUR 25.25. The market has thus largely corrected the misjudgement. Most analysts’ price targets are EUR 27. The annual report scheduled for December 10 will show whether the experts once again have greater confidence in the SDAX group and raise their targets towards the former highs of more than EUR 40.

Lahontan: Punished alongside the gold price

What the competitor was to Schott Pharma, the price of the precious metal is to Lahontan Gold. When the gold price recently fell to just over USD 4,000 per ounce, major producers such as Barrick Mining and Newmont saw their share prices fall, and so did those of smaller explorers. For the industry giants, every price change feeds directly through to profit. For Lahontan, however, other factors are decisive, above all when the Santa Fe mine in Nevada resumes operations. The Canadian company plans to reopen it because the leaching technology used then could extract only about 70% of the gold from the ore. Between 1988 and 1995, Santa Fe produced around 359,000 ounces of gold and 702,000 ounces of silver, but a substantial portion of the value remained untapped.

Significantly higher recovery rates can now be achieved. Rock lying in the open, once considered waste 30 years ago, contains 200,000 ounces of gold equivalent that modern technology can recover cost-effectively. This corresponds to theoretical revenue potential of USD 800 million, far more than the market capitalisation equivalent to around USD 90 million. Drilling at one of the historic waste dumps in September returned 2.72 g/t of gold over 16.5 m, material not yet included in the latest economic assessment. The Santa Fe project’s preliminary economic assessment (PEA) has been available since mid-October. According to the assessment, total resources amount to 2.39 million ounces of gold equivalent with a theoretical value of almost USD 10 billion, more than 100 times Lahontan’s market capitalisation. Of interest in this context is the latest interview by IIF presenter Lyndsay Malchuk with Lahontan CEO Kimberly Ann:

The initial plan is for 11 years of operation with average production of around 92,000 ounces of gold equivalent. Based on a conservative gold price assumption of USD 3,600 per ounce, the study calculates an after-tax net present value (NPV) of USD 820 million, more than fourteen times that of the previous study from 2024. One possible reason the share price has not yet taken off is the initial investment of USD 172 million, including a 20% contingency. CEO Kimberly Ann is currently negotiating with potential lenders, as only around 20% of this is to be financed through equity. Shareholder dilution from further capital measures should therefore remain limited. Ann and Chief Geologist Brian Maher are by no means breaking new ground in developing supposedly insignificant deposits. In 2010, the duo led Prodigy Gold to success and sold it to Argonaut Gold 26 months later. Excellent contacts with financiers and the necessary geological expertise are in place. A financing commitment could therefore become the most important catalyst for the share price, which currently stands at CAD 0.28 (EUR 0.18 on German trading venues).

The environmental studies are complete, and Lahontan expects construction permits in 2027. Ann and Maher aim to pour their first bars by early 2028 at the latest. If the gold price falls by then, the project would still be profitable: the economic assessment puts total costs per ounce at USD 2,250. Even at a gold price of USD 3,000, the net present value would be USD 476 million – more than five times the current market capitalisation. Whichever way you look at it, this share is one of the most glaring examples of mispricing. And Santa Fe is just one of four projects in Lahontan’s portfolio. The acquisition of Emergent Metals is intended to secure the neighbouring West Santa Fe project and avoid royalty payments if production starts there in future. Approvals are still pending. If and when they become available, they could also trigger an upward trend reversal.

Instone: A developer is not a landlord

Another case of stock market misjudgement is Instone Real Estate. The company is paying the price for a sector to which it belongs only to a limited extent. Since the Berlin election on September 20, the expropriation debate has weighed on property stocks. Die Linke became the strongest party with 25.7% and wants to bring owners of more than 3,000 flats into public ownership, which would affect landlords such as Vonovia. Instone, by contrast, builds flats and sells them to private investors, owner-occupiers and institutional investors. It has no rental portfolio of its own. Nevertheless, the share is trading at EUR 5.68, close to its low for the year. Irish fund management company Helikon took advantage of the weakness and increased its stake from under 4% to just under 11% in October.

However, Instone is not entirely blameless for the share price slide. In the first half, profit after tax fell from EUR 17.2 million to EUR 1.3 million. The management board is now targeting only the lower end of its full-year guidance, which would mean sales of EUR 650 million and an adjusted profit of EUR 35 million. To achieve this, the final quarter must deliver, with institutional sales of around EUR 150 million at an advanced stage in August. The foundations are solid: freely available cash amounts to around EUR 260 million, and 87% of the projects under construction have been sold. The market is proving “quite resilient”, says CEO Kruno Crepulja. However, the ECB’s interest rate increases are also weighing on demand, making financing more expensive for property buyers. The average analyst price target of around EUR 12.40, more than double the current share price, is, however, based on older research reports. The latest price target comes from Deutsche Bank and stands at EUR 8.00 – which still represents 40% upside potential. The quarterly results on November 5 will show where things are heading.

The stock market’s verdict is not final

Schott Pharma shows how quickly a blanket judgement can be reversed when the figures are right. For Lahontan Gold and Instone, that moment has yet to come. Neither the gold price nor the coalition negotiations in Berlin will be decisive, but rather execution: for Lahontan, financing, permits and further drilling results, and for Instone, sales in the final quarter. Both shares are speculative, but the upside potential is enormous.

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