However, with a chart like this, we decided to speak with the Investor Relations team at BSX. We like the entry point at these levels despite the special situation.

You’ll also see that this type of position is very similar to our prior ones in the healthcare field, like Medpace (MEDP), Stevanato (STVN), and Bruker (BRKR). Simply put, buying “high-quality” healthcare companies that are facing short-term issues can provide a very attractive risk/reward investment.

We are adding Boston Scientific (NYSE: BSX) to our portfolio, the “Aurelion Index”.

The story in short:

Boston Scientific was a Wall Street darling, with industry-leading growth and a track record of successfully developing new healthcare solutions. Since 2021, the company had been growing even faster, at around 15% organically, driven by its 2 new growth engines (Farapulse and Watchman).

However, in early 2026, both of those growth drivers started performing poorly. Farapulse is facing increased competition while Watchman has recently seen weaker demand from doctors.

With those 2 growth engines losing momentum, BSX is growing more slowly this year. Both products also had some of the highest margins in the business. Investors are clearly uncertain about the path forward and have sold the stock significantly.

3 things stand out from our call with investor relations:

1) After listening to the drivers behind their 2027 guidance, we believe it assumes close to a worst-case scenario, with plenty of potential positives that could lead to an upside surprise. New products in the pipeline are exciting and the rest of the business is generally on track.

2) BSX is making significant share buybacks, the first time since 2020.

3) Restructuring is recurring, rather than something being done simply to cut costs because they lack confidence in the two underperforming segments.

Methodology: Aurelion does not receive compensation from companies covered. We believe all information discussed is public, and answers from management are summarized and interpreted by us. They do not reflect the speakers’ exact words.

Table of Contents

1. Why Now?

2. Company Overview

3. Industry Landscape

4. In Conversation with Boston Scientific

5. Financials

6. Valuation

7. Risks

8. Conclusion

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1. Why Now?

1) Recent Insider Buying

The CEO, Michael Mahoney, bought $9M worth of shares on August 5th, 2026. This was his largest direct purchase in several years and increased his total ownership position by 15%.

Two other directors bought shares as well at the start of August.

For a healthcare company developing products that often require extensive trials and testing, this insider buying is a very positive sign for investors looking at the story. Management knows much more than the street.

2) Large Buybacks

The company made its first meaningful buyback since the pandemic, with $2B worth of shares, backing up its argument that the share price is undervalued.

3) Special situation with two product ranges that have significantly lowered the valuation.

There were three main events that caused the major slips. They are presented below in the price chart:

Farapulse treats irregular heartbeats.

A doctor threads a thin tube up to the heart and uses electricity to destroy the small area of tissue causing the problem. It is safer and about three times faster than the older method, which used heat to burn the tissue.

It went from nothing to roughly 80% of US procedures in just two years, meaning most of the market it was converting is now converted. Abbott, J&J, and Medtronic have also launched competing products. US growth has fallen to ~3% as BSX loses share. Management assumes sales stay flat through 2027 and gives no credit for winning share back before its next product generation launches.

Watchman helps prevent strokes. It is a small plug, about the size of a quarter, placed inside the heart to seal off the pocket where most dangerous blood clots form. It allows patients to stop taking blood thinners for life.

A wave of clinical studies came out in the last 9 months, some supportive and others less supportive. According to management and expert calls we have read, doctors responded by putting the decision off rather than working through the data because there was a lot and it was confusing.

Nothing changed about the device or the patients who need it. Management says physicians simply have not had time to absorb the data, assumes no improvement in 2027, and expects a new competitor to enter.

While we acknowledge the stock deserves a lower valuation given the lower growth coming from those two product ranges, which represent 25% of revenue, we think the stock has been unjustifiably punished. What we like is that there are several ways for investor sentiment to turn.

• Launches in 2027–2028: There are several new products coming onboard with billion-dollar market opportunities. These could fill the shoes of the two problem children.

• Farapulse: farawave ultra launches around mid-2027, with new heart imaging and faraflex coming in 2028. These could help growth recover in 2H27 and return to market growth in 2028.

• Watchman: Management is not counting on a recovery, but is increasing doctor education and direct-to-patient marketing. A possible label expansion and Medicare decision in 2028 could open a market where 30–40% of eligible patients are untreated.

We present a framework below of management’s expectations for Farapulse and Watchman as well as our own estimates. The key takeaway is that the impact is mostly that the company has lost these growth drivers quicker than expected, not that overall company growth is expected to turn negative.

Finally, we think that at 12x earnings versus its average of 20x earnings, we are paying very little for a high-quality business. Revenue generally grows 7–8% in the long term, plus acquisitions that they have proven to be successful with. There is also a margin expansion story, giving investors a great company to own even without those two performing well.

2. Company Overview

Boston Scientific at a Glance

Boston Scientific is a global medtech company that specializes in medical devices. It makes products that help doctors diagnose and treat serious health conditions, mainly in areas like heart disease, cancer, digestive, neurological, and urological care. BSX has a large and diverse product portfolio, which gives it exposure to several areas of healthcare.

Business Overview

Boston Scientific has two main businesses: Cardiovascular and MedSurg.

The company focuses on growing its existing businesses while also moving into new areas with growth potential. A big part of that comes from developing new products and gaining market share in procedures where demand is growing.

1. Cardiovascular Segment (67%)

The Cardiovascular segment is the larger and more diverse part of Boston Scientific’s business. It covers coronary and peripheral artery disease, blood clot removal, heart rhythm management, and electrophysiology.

One product is the AGENT, a drug-coated balloon used to treat patients whose arteries become blocked again after receiving a stent. Instead of putting in another stent, AGENT delivers the drug directly to the affected area without leaving any additional metal behind. It has been available globally since 2014 and is now the first and only coronary drug-coated balloon approved in the U.S.

BSX has products across the entire procedure, from imaging and vessel preparation to stents, thrombectomy, and other treatments.

It also has WATCHMAN, which is used to reduce stroke risk in certain patients with atrial fibrillation. BSX also has a growing presence in electrophysiology, where it has an interesting opportunity with its “FARAPULSE” platform.

FARAPULSE is one product we find particularly interesting. It’s Boston Scientific’s pulsed field ablation (PFA) system used to treat atrial fibrillation.

PFA is becoming a bigger part of AF treatment, with clinical data showing FARAPULSE can be as effective as traditional treatments while offering shorter procedure times.

As Boston Scientific’s Chief Medical Officer, Brad Sutton, put it: “We haven’t seen esophageal injury or pulmonary vein stenosis in nearly 40,000 cases.”

What also makes FARAPULSE interesting is that it covers several parts of the procedure, including access, mapping, and the actual ablation, which is the process of treating the heart tissue causing the irregular heartbeat. This gives BSX more exposure and more opportunities to sell its products.

A Look at FARAPULSE Products

As PFA continues to gain adoption, we think FARAPULSE will become an important part of Boston Scientific’s growth, especially as the company continues to expand its presence in the broader electrophysiology market.

2. MedSurg Segment (33%)

The MedSurg segment is mainly focused on Endoscopy, with products used to diagnose and treat gastrointestinal and pancreatic conditions.

The portfolio includes clips used to stop bleeding, stents used to open blocked areas, single-use scopes, and tools used in procedures such as ERCP. Boston Scientific also sells products for endoscopic surgery and weight loss, including the OverStitch suturing system and Orbera intragastric balloon.

ERCP Product in Action

One product we find interesting is OverStitch NXT, an endoscopic suturing system used to close tissue during certain procedures. It works with many commonly used gastroscopes, so hospitals may not need to buy new equipment to use it. It also gives doctors more control during the procedure and makes it easier to reach areas that can be difficult to access with standard scopes.

Overall, we see the MedSurg segment as another source of growth for Boston Scientific outside of cardiovascular, with a broad range of products used across different types of procedures.

China is a genuine growth market, with revenue above $1B and APAC growing 12% in Q1 2026. The main offset is VBP, which has cut device prices 50–93% and impacted parts of Vascular Therapies and Urology. Management is leaning into VBP by investing in local innovators and expanding its Chinese commercial team while competitors pull back.

3. Industry Landscape

Key named competitors:

Abbott Laboratories, Edwards Lifesciences, Medtronic plc, Stryker Corp.

Within offerings like endoscopy and urology (together 28% of 2025 sales) under the MedSurg segment, BSX is a dominant global player with stable and compounding revenues. In the Cardiovascular segment, BSX leads the market in LAAO with Watchman (though competitors are looking to enter) and they are #2 share in pulsed field ablation with Farapulse. Both of these markets (LAAO and pulsed field ablation) are becoming increasingly competitive, but BSX remains relevant or market-leading.

Outside of BSX’s dominant products where they are incumbents today, there are opportunities to expand the company’s product lineup, though not without competitive pressure.

One example: in intravascular lithotripsy (IVL), BSX launched SEISMIQ for peripheral use in January 2026 and is testing/awaiting approval for coronary use.

The key competitor in this space is Shockwave Medical (acquired by JNJ in June 2024). Shockwave’s C2 product entered the U.S. market in 2021 and has since become the 800 pound gorilla in the space, with over 600 peer reviewed publications covering 25,000+ patients. As a new entrant, that efficacy will be difficult to replace.

BSX’s offering in the space is slated to use laser and optical fibers instead of spark-gap electrodes to generate acoustic pressure waves which early data suggests produces a more uniform energy profile. In addition to Shockwave under JNJ, Abbott and Phillips Healthcare are seeking to enter the IVL market as well, with each player moving toward regulatory verification.

In coronary IVL specifically (related directly to or around the heart itself), BSX can take advantage of their broader coronary ecosystem in imaging, stents, and drug-coated balloons.

BSX essentially already offers steps 1, 3, and 4 of this procedure, whereas their coronary IVL offering would address step 2 in the chain and create a more unified ecosystem of products. Coronary IVL specifically has a $1Bn estimated TAM which would move the needle for BSX’s sales if they can penetrate the market.

There are many other segments and markets that can be entered organically or through investment and M&A. BSX has historically been an acquirer of companies with strong and complementary assets.

Examples include their Penumbra acquisition in January 2026 for $14.5B, granting assets in neurovascular and mechanical thrombectomy.

An interesting aspect of BSX’s capital allocation is their venture-capital playbook.

The Farapulse product that drove such strong growth in 2024 and 2025, BSX first invested in 2014, and in 2021 exercised an option to acquire the remaining stake in the company, bringing it fully in-house.

The acquisition-in-pieces structure allowed BSX to pay roughly $575M for 100% control over time for this asset that has now come to drive strong growth. BSX has run this playbook in other areas, with the initial VC investment approach to reduce risk, and a full acquisition once the application is proven.

Penetration vs Market Share

In medtech, penetration matters more than market share for determining growth. For example, Farapulse has reached ~80–85% of US procedures in two years, so Farapulse’s category-driven growth is largely over and further growth must come from taking share. LAAO is the opposite. BSX has >90% of the implanted device market, but penetration is still only in the mid-teens among ~5M eligible patients. The main issue is getting more patients referred.

Reimbursement is important too, since the procedure only grows when both doctors and hospitals have a good reason to do it.

To summarize, the industry is highly competitive but favors large, established players like BSX. The key is to look at each product category separately, as growth rates, market shares and competitors vary significantly. For BSX, management targets 7–8% long-term organic growth across its diversified portfolio.

4. In Conversation with Boston Scientific

We spoke with Boston Scientific’s Investor Relations team mid-August 2026. Below is our summary of what we took away in our interpretation.

1) The 2027 framework assumes a largely unchanged environment.

In the last call, management gave a framework (not “guidance”) of 2 - 4% organic growth for 2027, with formal guidance coming on the Q4 call in February.

The build behind it is simple: the other 75% of the business grows around 6%, the Watchman market declines mid-to-high single digits, and global EP sales are flat.

That’s it. There is no assumption that the medical education effort works, no assumption that referral patterns normalize, and no assumption that urology recovers from 1%.

We came away thinking the number is closer to a floor than a midpoint. It looks like they have more visibility into the problem. And it is reassuring with BSX’s history of surpassing expectations (they’ve cut guidance only 2x in 15 years).

2) The rest of the business grows at 6-7%

75% of the business has been growing at 6-7% for a number of quarters.

What we found more interesting is that the 6% of last quarter carries the urology segment growing at 1% and CRM at negative growth. There are measures in place to fix them. If either works, growth will be higher.

3) Urology looks fixable, although it has taken longer than expected.

The 2024 Axonics acquisition brought a “sacral neuromodulation” business that requires lots of human capital. Leadership and team turnover after the acquisition took reps out of the field. That hurt the selling effort and the patient funnel.

Refilling the funnel has taken longer than expected. Management expects growth to come back to the market growth rate which is 6 - 7% . This is definitely one of the most fixable of the 3 problems.

4) Watchman’s problem appears to be communication.

Nothing has changed in how the device is made or used, and it has been on the market for over a decade. What changed is that a large amount of clinical data came out at once, with some of it favorable and some less so.

According to management, physicians haven’t had time to fully absorb what it means in practice. For a busy doctor, the easiest decision is simply not to pursue it.

5) Spending on Watchman has not been cut.

The two largest cost lines are the sales force and direct-to-patient marketing and neither is being cut. Management was explicit that it does not want a short-term decision today to damage long-term growth.

We read continued investment into a shrinking franchise a proof of conviction.

6) The new products could increase growth in 2027 and 2028.

Management discloses the new products coming out in its investor relations deck. While we did not get more information, it’s safe to say these could be potential drivers. We look forward to commentary in upcoming earnings calls.

7) The restructuring is a scheduled program.

Boston Scientific runs one roughly every three years: 2019, 2023, and now. We see most of the benefit to land in 2028. The savings come from manufacturing efficiencies, supply chain optimization, and organizational structure. This would have happened regardless of how Watchman and EP performed.

8) Free cash flow guidance impacted by Watchman & Farapulse

The 2026 figure is now closer to $3.8B versus roughly $4B coming into the year, with the shortfall attributable to lower cash coming from Farapulse and Watchman. BSX targets 70–80% conversion from EBITDA. This appears to be a high target compared to historicals for us.

9) The broader demand environment is stable.

Management sees healthy procedure volumes and no evidence supporting the softer readings some analysts have published. The recurring variable is reimbursement, which splits into a physician fee and a facility fee. This year, the physician fee was relatively stable while the hospital fee was cut somewhat.

5. Financials

Because BSX makes meaningful acquisitions, we remove the acquired growth to look at the underlying business. The historical performance is consistent with management’s 7–8% CAGR target, with periods of higher growth when new solutions are coming out and lower growth when there are issues.

On the company’s margins, the trend has been clearly positive, driven by a mix of cost cuts and a better business mix.

2013–2016: BSX came out of the financial crisis with a bloated structure, a declining defibrillator business, and heavy litigation. Restructuring helped close plants, consolidate manufacturing, and reduce headcount, taking margins from 15.8% to 24.1%.

2016–2019: Management shifted toward higher-growth categories like endoscopy, urology, and interventional cardiology while moving away from slower-growth businesses. Margins reached 26.1% by 2019.

2020: COVID. Elective procedures stopped and margins fell. They recovered within two years.

2021–2025: mix and operating leverage. High-growth markets increased from 25% to 55% of revenue, while low-growth exposure declined from 30% to 20%. Farapulse and Watchman, both above corporate margin businesses, also grew rapidly.

The result is 1,220bps of margin expansion in twelve years, with roughly 80bps of annual expansion in 2023–25. For balance, 2026 is guided flat at 28.0%, as the mix tailwind that drove much of the recent expansion reversed.

BSX has made numerous acquisitions in the past, most of which have been financed with cash and debt. The company has been very successful at making these acquisitions. Share issuance has been low, which is something we like to see.

In total, combining organic growth, margin expansion, and a virtually flat share count, BSX has been able to grow at a CAGR of 12.2% over the last 14 years.

6. Valuation

Revenue Growth

We assume growth to be all organic but include announced acquisitions in our revenue numbers. We are slightly over the Street in the 2027 period because we think it will be easy to beat the 2 - 4% discussed by management. For the following periods, we assume the long-term range for BSX’s growth (7 - 8%).

Margins

Because new products coming in the 2027–2028 period should boast higher margins than the rest of the business, we give a bit of margin expansion to BSX.

Moreover, the restructuring they are doing should help lower costs for the 2027–2028 period, though we expect margins to be slightly impacted in 2027 with Farapulse and Watchman.

Because BSX has proven over time to be able to grow their margins in the last decade, we think this is the base case. Our EBITDA margin increases from 30.2% to 31.5% in 5 years.

Cash Flow Generation

Management told us 70 - 80% conversion from EBITDA as a target, though we view this as high compared to what they have historically done. Our model therefore implies more in the 62% conversion range.

Capital Allocation

We assume a +0.7% growth in diluted shares outstanding coming from normal stock compensation and the rest of cash to go towards buybacks.

Because BSX is now buying back a significant amount of shares and has proven that their acquisitions enhance the value of their share price over time, we think putting all the cash to work in buybacks is a fair projection for our long-term price targets.

Technical note: A few sell-side analysts double-count amortization in their adj. EBITDA calculation because amortization is already excluded from adj. operating income, so the result overstates true EBITDA.

We use adjusted operating income + depreciation only.

We do not argue for a comeback to the all-time high multiple, nor the average, but rather to the bottom of its historical average. 10 - 12x EBITDA is a multiple for a scenario where Farapulse and Watchman become significant detractors to growth, which has not been proven yet.

Our valuation is as follows, driven by an 8% earnings CAGR, meaningful buybacks, and a slightly higher multiple than the current one.

• Our price target for year-end 2026 is $67.

We do not think BSX is worth its previous $100 PT or that it will get there quickly, given the uncertainty and slower growth around Farapulse & Watchman.

However, even under what we consider a base case, where both Farapulse & Watchman perform poorly, our valuation still points to compelling upside.

7. Risks

1) Farapulse could lose more share than we expect. Management assumes global EP sales stay flat through 2027, which we view as conservative. However, one Abbott territory manager expects Farapulse’s US share to fall from ~70% today to 35–40% by 2027 as Affera and Volt gain traction. We would not take that estimate at face value, but if share loss is even directionally close, EP revenue could decline rather than stay flat. The main issue is that BSX’s mapping remains weaker until its new imaging product launches in 2027.

2) Watchman’s issue may be more than communication. Management believes doctors need more time to digest the recent clinical data. There may also be an economic issue, as hospitals and doctors can have different incentives around the procedure. With a new competitor coming in 2027 and no major label or coverage change expected until 2028, Watchman could remain a headwind for longer than expected.

3) Penumbra could weigh on the numbers. The $14.5B acquisition closes in 2H26 and is excluded from current guidance. Penumbra has lower margins than BSX, while integration costs and amortization will also create pressure. It also reduces the balance sheet flexibility that has supported BSX’s M&A strategy.

Overall, we think the risks are real, but importantly, we do not need Farapulse or Watchman to fully recover for the investment to work.

That is what makes the current valuation interesting to us.

8. Conclusion

Boston Scientific is going through a temporary slowdown.

Farapulse and Watchman have clearly become headwinds, and we do not expect either business to quickly return to its previous growth rate. But the rest of the company continues to grow, new products are coming, margins have a long track record of expansion, and management is still allocating capital aggressively through buybacks and M&A.

At 12x earnings versus a historical average of ~20x, we believe the market is pricing in a much worse outcome than our base case. Even assuming Farapulse and Watchman remain significant headwinds, we see attractive upside from the underlying business, new product launches, margin expansion, and buybacks.

The key for us is that we do not need everything to go right. We are buying a high-quality compounder while two of its growth engines are temporarily struggling. If either one stabilizes faster than expected, or the new product pipeline delivers, the upside could be meaningful. We believe this creates an attractive risk/reward and are adding Boston Scientific to the portfolio.

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View how the portfolio is positioned here: Aurelion Index link.

Below is our most recent report covering our previous stock addition.

The Aurelion Team

Questions? Reach us directly on Substack or at contact@aurelionresearch.com.

Disclosures & Methodology

All forecasts and estimates are based on publicly available information, management commentary, and our own modeling assumptions. This report reflects independent analysis by Aurelion Research. All opinions and estimates expressed herein reflect the author’s judgment as of the date of publication and are subject to change without notice. This publication is for informational and educational purposes only and does not constitute investment advice, a solicitation, or a recommendation to buy or sell any security. Aurelion Research and its analysts may or may not hold positions in securities discussed. Use only where legally permitted.

However, we believe it is also a strong long-term compounder with solid fundamentals, and our goal is to hold the company for 5+ years.

The company is already generating revenue with surgical robots, but it is still a small percentage, and we believe the stock can do very well without surgical robotics. Given the low valuation (11x earnings, below peers and below historical valuation), we think this is an optionality, making the situation “asymmetric.”

Outside of surgical robots, the medical technology company is an established leader in spinal implants with best-in-class margins.

Further, healthcare sentiment has been shifting. Since the pandemic, performance of healthcare equities has been poor, with almost no gain since 2019.

However, in recent months we have seen a growing interest in healthcare, given that growth is proving to be strong and investors are looking to move away from AI uncertainty.

Whether AI booms or busts, you still need surgical tools.

Earnings are inflecting, margins are expanding, and the stock still trades cheap. We also provide expert calls with executives from the company.

Table of Contents

1. Why Now?

2. Company Overview

3. Industry Landscape

4. Expert Calls

5. Financials

6. The Acquisition Strategy

7. Surgical Robots Theme

8. Valuation

9. Risks

10. Conclusion

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The new stock we are adding today to the Aurelion Index is a mining company that focuses mainly on copper, but also produces gold, silver and zinc.

And importantly, we go through our thinking on why we like copper-related equities now.

What we like about this one is that it offers a mix of existing copper production, mine-life extensions, and a growing pipeline of new projects. So this isn’t a mining story where you produce for a couple of years, make some money, and then need to get out. There is a long-term growth story here.

The company is Canadian, like many mining companies, but trades on both the NYSE in the U.S. and the TSX in Canada. It also owns and operates mining assets in friendly jurisdictions.

With a market cap of over $10B and strong trading volume, it is more accessible to institutional investors and has greater potential to attract momentum as the story gains attention.

Table of Contents

1. Why Now?

   1.1 An Attractive Entry Point

   1.2 The Copper Bull Case

2. Company Overview

3. Why the Valuation Is Attractive

4. The Path to Sustainable Growth

5. How We Value the Company

6. What Could Go Wrong

7. Our Final Thoughts

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Listed in the U.S. on the NYSE, today we are adding a new company to our portfolio, the “Aurelion Index”.

It is currently our highest-conviction name in the Aurelion LATAM Basket.

We have followed this business closely for some time, but have been waiting for the right moment. After a period of underperformance, the stock has recently regained momentum, creating what we argue is an attractive entry point.

We believe this is a company with significant growth potential, exposure to key trends across Latin America, and an attractive valuation.

It has proven its business model, being one of the largest banks in LatAm. In our view, the market is overlooking the quality & long-term potential of the business.

Table of Contents

1. Why Now?

   1.1 Long-Term Growth Runway

   1.2 Macro Environment & Market Sentiment

   1.3 Our Belief That the Business Is Undervalued

   1.4 An Attractive Entry Point

2. Investment Thesis

3. Company Overview

4. Financials

   4.1 Why We Believe the Valuation Is Attractive

   4.2 The Path to Sustainable Growth

   4.3 Outperforming Traditional Banks

   4.4 Fee Growth: Another Competitive Advantage

5. Asset Quality: Addressing the Bear Case

6. How We Value the Company

7. What Could Go Wrong

8. Our Final Thoughts

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The C-suite is bullish on the stock (that’s usual), but is backing it by buying a significant number of shares, representing a large number relative to their net worth.

With 67% revenue growth this year and 38% EBITDA margins, the company trades at 12x EBITDA. What stands out to us is that their (extreme & non-AI) growth is durable for the coming years. In our view, its profitability is misunderstood due to the current high capital expenditure requirements.

We recommend watching this video to understand what they do in 1 min:

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After quite a success with Marex Group, we are pivoting to another capital markets company. This company has been on our radar for a while, and following our meeting with management on July 13, we decided the timing was right to add this compounder.

“If we did not have futures contracts today, we would need to invent them in order to move forward and progress.” — Milton Friedman, speaking to Terry Duffy (CME Group CEO), 2002

The global exchange ecosystem is instrumental to capitalism as we know it. By facilitating the trading of stocks, derivatives and enabling the transfer of risk, exchanges drive global commerce in a massive way.

As a result of their durable and nearly indefinite earnings power (exchanges are among the longest-lived businesses in existence), exchanges have historically traded at rich valuation multiples. However, so far in 2026, the love affair with exchange multiples has cooled off.

Since the recent launch of perpetual futures by crypto trading platform Hyperliquid, dominant U.S. exchanges have faced a rare level of scrutiny from investors. Three of the big four (ICE, CME, NDAQ, and CBOE) are down meaningfully this year as concerns grow around competition from new trading products.

Some investors worry that new trading products like perpetual futures and tokenization could take market share away from traditional exchanges.

Our pick today is smaller and less discussed than the large exchanges, but it has been caught in the same crossfire.

However, the company is not an exchange and we believe its position remains highly secure regardless of perpetual futures adoption or potential tokenization.

The company operates primarily in highly attractive asset classes with very durable long-term growth tailwinds in which it enjoys dominant market share.

Like many trading businesses, incremental margins are very high, but unlike most, capital requirements are extremely low. The business operates with negative working capital and generated a 30%+ ROE in 2025 when adjusting for non-operating intangible assets on the balance sheet. FCF conversion is also very strong, with margins above 45%. Low capex requirements (~5% of revenue) and a largely fixed cost base drive operating leverage, allowing excess cash flow to be returned through strategic M&A, dividends, and buybacks.

Revenue has grown at a double-digit pace for decades, with no down year since inception. Since 2022, revenue has grown at a 20% CAGR while free cash flow margins expanded, and we believe long-term growth can remain in the low-to-mid teens.

Today the business trades at 22x free cash flow, the lowest valuation it has seen since October 2022. Management is using the decline as an opportunity to repurchase shares at accelerated rate compared with repurchases in prior years:

We think the stock has dislocated from fundamental intrinsic value. Quarter-to-date, we’ve purchased nearly $100M of stock. We have over $400M left on the authorization.” — Company CFO at a conference in June

Table of Contents

1. A Digital Market Infrastructure Platform

2. Dominating the Rates Market

3. Building the Future of Credit Trading

4. The Economics of the Business

5. Strategic M&A as a Growth Driver

6. Valuation: A Compelling Entry Point

7. What Could Go Wrong

8. Our Final Take on the Company

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In this case, this was one of the most interesting discussions we have had in a while, with this $50B semiconductor behemoth. Cerebras, a Silicon Valley-based AI computing company, IPO'd in May and is at the forefront of the industry.

In early July, we discussed with Sean J. Dorsey, Head of Investor Relations and Senior Director of Strategic Finance at Cerebras. Sean has been at Cerebras for five years and works directly with the CFO. Before joining Cerebras, he was a VP in equity research and investment banking, covering semiconductors at major banks. An ex-Wall Street guy, as he described himself.

Off topic from Cerebras; he gave us his thoughts on independent research and how much emphasis they put on leading Substacks. It’s simple, Substack is becoming the place to be for independent investment research:

Sean: “Major companies’ IR teams and management are increasingly approaching independent research platforms like Substack and X in a similar way to how they approach traditional sell-side analysts.

The reason is simple: independent research has become increasingly important, with the ability to influence investor perception and market sentiment. Management teams are listening and reading the research that is published on Substack.” (adapted and interpreted for context).

He brought up (SemiAnalysis) and (publications we highly respect) as examples of why they want to engage more with leading Substacks because, he said, some forecasts were very different from what the company expected.

We begin with the company’s story, dive into our conversation with management, explore what it means for the broader AI infrastructure race, break down the bull and bear cases, and finish with our view on valuation.

We usually aim to give an actionable investment idea on a theme or a market. This is not the case for this report, but you’ll get some interesting insights on the AI trade, Cerebras, and independent research.

Methodology: we independently reaches out to company management teams. Aurelion Research does not receive compensation from any company covered. The answers from interviews are based on our notes and have been adapted and presented for clarity. They may not reflect the speakers’ exact words. We have selected the sections below that we believe are the most relevant parts of our discussion. All information discussed is believed to be publicly available. This content is for informational purposes only and is not investment advice or a recommendation to buy or sell any security.

Table of Contents

1. Company Intro: A Different Approach to AI Computing

2. In Conversation with Sean Dorsey

3. Implications for the AI Trade

4. The Debate: The Promise and the Challenges of Cerebras

   4.1 The Bull Case: A New Path for AI Computing

   4.2 The Bear Case: The Challenges Behind the Ambition

5. Valuation: An Analyst’s Nightmare

6. Our Final Thoughts on Cerebras

1. A Different Approach to AI Computing

Cerebras is a semiconductor company that builds chips designed for AI processing. It went public in May 2026 and trades under the ticker CBRS.

Its main product is the Wafer-Scale Engine 3 (WSE-3), a massive AI chip built as one large piece instead of many smaller chips working together.

Traditional AI systems use many separate chips that need to constantly share information, which can slow things down. Cerebras takes a different approach by putting everything together in one place, allowing information to move faster and helping customers run large AI models more efficiently. The WSE-3 is designed to handle AI workloads that would normally require many traditional chips.

How Cerebras Is Riding the AI Compute Wave

The Silicon Valley company has two main revenue streams:

1. Direct Hardware Sales (57%)

The company sells its AI chips and computing systems directly to customers looking to build and operate their own AI infrastructure for large-scale workloads.

2. Cloud & Services (43%)

Cerebras Systems operates its own global network of AI data centers.

It offers cloud services, allowing customers to access its computing power without owning the hardware. Customers can either reserve dedicated computing capacity or pay based on the amount of computing power they use.

An important point to mention: just one year ago, the revenue mix was quite different. Around 70% of revenues came from hardware sales, while 30% came from its cloud offering. So, what happened?

The change came from rapid growth in its cloud business, accelerated by a massive multi-year inference deal with OpenAI that began ramping in early 2026, combined with an Amazon cloud partnership. Instead of only selling the infrastructure, it is increasingly monetizing access to that infrastructure.

Customers can now use Cerebras’ computing power through the cloud without needing to purchase, install, and manage expensive AI hardware themselves. This should create a more recurring, service-based revenue stream while allowing Cerebras to benefit directly from the growing demand for AI compute.

The timing is also important because the AI industry is entering a new phase. Early AI spending was largely focused on training increasingly larger models, but we are now moving into an entirely new wave that is expected to be driven by inference as these models transition into real-world applications.

Here’s an interesting quote from AWS VP Compute & ML Services, David Brown.

“Inference is where AI delivers real value to customers, but speed remains a critical bottleneck for demanding workloads like real-time coding assistance and interactive applications. What we’re building with Cerebras solves that by splitting the inference workload across Trainium and CS-3, connected through Amazon’s Elastic Fabric Adapter. The result will be inference that is an order of magnitude faster and higher performance than what’s available today.”

Amazon and Cerebras are combining two different AI chips, with each one doing the job it is best at. By working together, they can generate AI responses much faster than traditional systems, making applications like coding assistants more responsive for users. This creates a win-win situation for both companies.

2. In Conversation with Sean Dorsey

Aurelion Research (AR): ‘‘Could you walk us through your role at Cerebras, your background, and how you got to where you are today?’’

Sean Dorsey

“I’ve been at Cerebras for five years, so I was here well before the company became public. I work closely with the CFO on financial matters and have also taken on investor relations responsibilities, which gives me a unique perspective on both the business and how investors view the company.”

Thoughts

Before joining Cerebras, Sean spent time on Wall Street, working in Equity Research and Investment Banking and covering the semiconductor industry at several major banks. In other words, he went from analyzing chip companies from the outside to helping build one from the inside, giving him a unique perspective on the industry.

AR: ‘‘How does Cerebras think about its customer strategy, and what drives customers to adopt its technology and build long-term partnerships?’’

Sean Dorsey

‘‘Our customers today are massive companies, like Amazon and OpenAI. These are not your typical customers. They are so large that, in some ways, you could almost think of them as resellers or distributors because of the scale at which they operate. We have a small number of very large customers, and that makes our go-to-market strategy quite unique. We do not need a massive sales force because we are focused on a handful of strategic accounts.

The advantage is that we know these customers extremely well, understand their needs, and can work closely with them. Because of that, we can operate with a relatively lean sales and marketing organization and allocate more resources toward engineering and product development.

We believe this is a competitive advantage for Cerebras. We also believe we have built a strong market engine. Even though we are a much smaller company, we have managed to position ourselves in the same conversations as some of the largest AI infrastructure companies in the world, including Nvidia.”

Thoughts

Cerebras’ customer strategy is interesting because the company is prioritizing depth over volume. Instead of trying to sell to thousands of customers, it is focusing on a small number of very large ones. This allows the company to stay lean and focus more resources on improving its products. The key question will be whether this strategy can continue to work as Cerebras grows.

AR: “There has been discussion around whether Cerebras’ approach to handling memory could face limitations as AI models continue to grow. How does the company think about this potential challenge, and how would it adapt if the industry shifts toward using more external memory solutions?”

Sean Dorsey

“I think some of the discussion around our architecture comes from people looking at Cerebras from the outside without having spent significant time using our compute or understanding all the nuances of the technology. They are doing their best to understand the product and the value proposition, but there are limits when you are not directly working with the system.

A recent example is the assumption that Cerebras would not be able to support very large models. We were a day-zero launch partner with OpenAI for its latest multi-trillion-parameter model, delivering it at up to 750 tokens per second, which is significantly faster than GPU-based alternatives. So clearly, there are still some misconceptions around what our architecture can and cannot do.

Building a wafer-scale chip was something that many people believed was not possible for decades. We proved that it was technically viable, and now we are proving that it can also be commercially viable. We have real customers making significant commitments to our technology, and our focus is to continue proving the doubters wrong over time.”

AR: ‘‘How does Cerebras think about attracting and retaining top talent, especially when competing against much larger semiconductor companies?’’

Sean Dorsey

“I think we’ve had a lot of success hiring people because we’re still the small guy that’s growing quickly, with a lot of momentum and opportunity ahead of us. Generally speaking, that is a very attractive position to be in compared to a much larger company that is trying to innovate in new markets.

We’re able to attract talent from some of the biggest technology companies in the world. We have people here from AWS, Meta, Apple, Google, Nvidia, and AMD. There are obviously many benefits to being a large company, but talent retention can also be a challenge when you’re operating at that scale.

I think the current environment has also created opportunities for us. While AI and semiconductor companies continue to invest and grow, other areas of technology have seen more pressure, which has created a strong talent pool for companies like Cerebras. Today, we have roughly doubled our headcount over the past 18 months and are approaching 1,000 full-time employees.

What’s also interesting is the composition of the team: around 80% of our employees are engineers, and 80% of those engineers are software engineers.

So despite competing against much larger companies, we’ve been able to attract strong technical talent because people want the opportunity to have a bigger impact, take on more responsibility, and help build something at an earlier stage.”

Thoughts

Talent is often overlooked when analyzing semiconductor companies, but we believe it can be a major competitive advantage. In AI infrastructure, where technology evolves quickly, the ability to innovate and execute depends heavily on the strength of the team behind the technology.

Cerebras remains much smaller than industry giants, but its ability to attract experienced engineers from leading technology companies shows that it has created an environment where people see an opportunity to make an impact. The key question is whether this advantage can continue as the company grows.

Then came the most interesting part: the new wave of research.

We mentioned this earlier in the article’s introduction. We learned that management teams at large companies like Cerebras are increasingly paying attention to research published on Substack and by influential accounts on X.

Why? Because they agree that research produced outside of the traditional sell-side ecosystem has become increasingly important, which is something we rarely hear from companies. This means that the work being done on these platforms is being read by major companies and market participants.

AR: ‘‘Do you think independent research platforms like Substack and X have become increasingly influential in shaping market sentiment?’’

Sean Dorsey

“I think it’s something that we’re all trying to rethink in terms of where we allocate time. We should probably be spending more time with the Substack community because whether or not we like it, whether they’re right or wrong, they have the ability to influence the market. We’ve spent so much time with some of the largest institutional investors in the world because they have the ability to move stocks as well. But so do people on X.

They have a microphone, and we should probably think about them in the same way that we think about top institutional investors like BlackRock.

They really understand our technology and our story, but just because some researchers don’t fully understand it today, that doesn’t mean we shouldn’t engage. We need to continue having thoughtful conversations, educating the market, and creating opportunities to explain why they may have missed something. Having that healthy debate in the market is usually a very good thing.”

AR: ‘‘How does Cerebras approach working with independent researchers when there are disagreements about the company or its technology?’’

Sean Dorsey

“It’s a fine line. You don’t want to insert your words on top of theirs or take ownership of their work. But if we can educate them on certain aspects, we want to do that. When SemiAnalysis was preparing its report ahead of our IPO, they sent us a 50-page document and gave us an opportunity to provide feedback.

We left a lot of comments around areas where we thought things were not quite right, lacked context, or were simply incorrect. The challenge is figuring out the right way to engage. If a Morgan Stanley analyst sent us a report, we wouldn’t edit their report. We would try to help improve their understanding of the business and technology.

That’s the same approach we want to take with Substack authors and writers on X. We can’t give preferential treatment just because someone is on Twitter. The same standards should apply to everyone.”

Thoughts

We found this particularly interesting given SemiAnalysis’ strong reputation within the semiconductor industry. Cerebras is also a well-known company in AI infrastructure, making this debate more about differing views on the technology rather than a lack of information. Hearing this perspective directly from someone who has been with CBRS for years provided valuable context and helped us better understand the other side of the discussion, the one we do not usually hear about.

AR: ‘‘What are some of the biggest misconceptions investors still have about Cerebras?’’

Sean Dorsey

“For 10 years, people have questioned whether what we were trying to do technically was possible. People said you wouldn’t be able to build the chip, you wouldn’t be able to cool it, power it, run large models on it, or scale the architecture. None of that is new. We will never convince every doubter, but we will continue to prove them wrong over time.

We have a fundamentally different architecture, and you can’t apply the same assumptions used for traditional chip design to what we are doing. I think we can do a better job educating people about that as we continue to grow.”

AR: ‘‘When well-known researchers misunderstand Cerebras’ technology, how do you think about addressing those misconceptions?’’

Sean Dorsey

“I think everyone’s got a point of view based on their own experience and how they’ve arrived at it. Dylan recently told us that his mental model of Cerebras and our architecture was wrong after speaking with our CTO and our CEO.

I’m a glass-half-full kind of guy, so I see that as an opportunity. If we can continue educating researchers like SemiAnalysis and other independent writers with large audiences, it’s an opportunity not only to improve public understanding of our architecture, but ultimately how the market values the company.”

Of course, we want to make clear that Dylan has been right far more times than wrong and is an exceptional voice for semiconductor analysis.

3. Implications for the AI Trade

Here are simple implications and inferences from the conversation.

1) Inference Is the New Race

For readers new to the AI market, it helps to understand the two phases of AI computing. Training is the process of building an AI model. A company feeds enormous amounts of data through thousands of chips over weeks or months, and the model learns from it. It is a one-time, upfront cost, similar to building a factory.

Inference is what happens after: every time you ask ChatGPT a question, generate an image, or use an AI coding assistant, the finished model is running a calculation to produce your answer. That is inference. It happens billions of times a day, and every single request consumes computing power.

The first wave of AI spending went into training ever-larger models. But a model only creates value when people actually use it, and usage is exploding.

Inference is expected to represent roughly two-thirds of all AI compute in 2026, up from one third in 2023. Unlike training, inference is a recurring cost that grows with adoption, which is exactly why speed and cost per request have become the new battleground. This is the wave Cerebras is positioned to ride: its chips are built to run models faster than traditional GPUs, and its deals with OpenAI and Amazon are inference deals, not training deals.

2) Nvidia’s Monopoly Is Starting to Weaken

For years, buying AI chips meant buying Nvidia. There was no real alternative, and that scarcity let Nvidia charge premium prices and earn exceptional margins.

That is starting to change. Amazon, one of the largest chip buyers in the world, now runs AI workloads on a combination of its own in-house chip (Trainium) and Cerebras hardware, using each one for what it does best. When the biggest customers start mixing and matching suppliers instead of depending on a single vendor, that tells you something.

Nvidia still dominates the market and its software ecosystem remains a huge advantage. But the “there is no alternative” premium that supported its valuation gets harder to justify when credible alternatives exist.

The winners from this shift are the challengers: specialized chipmakers like Cerebras and Groq, and the custom chips that Amazon, Google, and OpenAI are designing themselves. The AI chip market is moving from a monopoly toward an oligopoly, and that creates opportunities further down the food chain.

There was simply no way one company could make AI chips for the entire planet.

3) Customer Concentration Is a Feature of the AI Trade and a Systemic Risk

Sean described customers so large they’re “almost resellers or distributors.” The entire AI supply chain now hangs on a handful of buyers (OpenAI, Amazon, Meta, Google). If one slows spending, the shock propagates through every supplier simultaneously. Correlation across AI names is so high, probably higher than the headline suggests.

4) The Talent Migration Is Immense

Cerebras doubled headcount in 18 months, pulling engineers from AWS, Meta, Nvidia, and AMD, while “other areas of technology have seen more pressure.” Human capital is concentrating in AI infrastructure the way it concentrated in internet infrastructure in 1999. That’s bullish for near-term execution.

Yes, this is a classic late-cycle signal worth monitoring when comparing it to the dot-com bubble. However, at that time, cash flows were basically zero.

Now, the large companies in the AI trade, like Nvidia and the hyperscalers, are printing cash. If technology improves and more cash is generated over the long term, that’s not a bubble. When you have hundreds of thousands of the smartest brains in the world working on one new technology, it is simple to expect significant improvements in that technology.

5) Information Asymmetry in AI Names Is Shrinking

Management teams now treat top Substack and X researchers in the same way as institutional investors. When a company reviews a 50-page SemiAnalysis report pre-IPO and leaves comments, the edge is compressing.

Alpha in AI infrastructure will come less from information and more from interpretation, timing, and valuation discipline. Which is why we believe good research and contrarian thinking matter even more.

6) Valuation Is Narrative-Driven Until Cash Flows Arrive

That is an obvious one. With profitability not expected before 2027 and free cash flow in 2028, prices in this cohort trade on news flow and sentiment.

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4. The Debate: The Promise and the Challenges of Cerebras

4.1 The Bull Case: A New Path for AI Computing

The bull case for Cerebras is built around one main idea: as AI models become larger and more complex, the industry may need new approaches to computing. Today, most AI systems rely on GPUs, but scaling these systems requires connecting many chips together, which can create performance limitations.

Cerebras takes a different approach by combining computing and memory on a single large chip, which bulls believe could help address some of the challenges created by increasingly complex AI models. The Silicon Valley-based company is competing in a rapidly growing AI infrastructure market alongside companies such as Nvidia, Groq, and SambaNova.

While Nvidia benefits from a strong software ecosystem built over many years, bulls believe Cerebras’ hardware design could give it an opportunity in areas where speed and efficiency are especially important.

The company is also expanding beyond hardware sales through cloud services, allowing customers to access its systems without purchasing the infrastructure themselves and potentially creating a more recurring revenue stream over time.

4.2 The Bear Case: The Challenges Behind the Ambition

The bear case for Cerebras is built around three main concerns:

1. Customer concentration

2. Software Ecosystem

3. Long-term scalability

First, Cerebras currently depends on a small number of large customers. While the company is working to expand its customer base, bears argue that relying on a few major contracts could make future revenue less predictable.

Second, Nvidia’s advantage extends beyond its chips. Its CUDA software platform, which allows developers to build and run AI applications on Nvidia hardware, has been developed over many years and is widely used across the AI industry. Bears believe this could make it more difficult for Cerebras to convince customers to switch to a different ecosystem.

Finally, some investors question whether Cerebras’ technology can continue to support the increasing demands of future AI models. Dylan Patel from SemiAnalysis has raised concerns around whether the company’s current approach can scale as AI systems become more complex. These questions remain an important part of the long-term debate around Cerebras.

5. Valuation: An Analyst’s Nightmare

The company’s revenue growth is gigantic, expected to 20x over the next 4 years.

Wall Street expects this company to turn profitable in 2027 and for cash flows to be positive in 2028. On the positive side, the company has enough cash on the balance sheet to cover upcoming needs. The EBITDA forecast could make sense.

However, we are less confident about the cash flow forecast. The need for continuously investing and staying at the forefront of the AI race will persist, and we think the company will prefer to spend to continue trying to develop leading technologies rather than having cash generated and distributed to shareholders.

Is this company worth $20B, $50B, or $100B? Usually, it is quite easy to triangulate toward a valuation range when the company generates cash, but in this case, valuing the company with any confidence is tough enough that it makes the share price mainly dependent on short-term news.

6. Our Final Thoughts on Cerebras

The reason we are not currently adding Cerebras is that, while it operates in a highly attractive and growing sector, it has not yet proven that it can generate the level of free cash flow and profitability needed to justify its current valuation.

We believe Cerebras has built an impressive product with significant potential, but we would like to see the company demonstrate that it can successfully scale its business and translate its technology into sustainable financial results.

Another important factor is timing. At Aurelion Research, we are not only looking for great companies; we are also looking for the right moment to invest.

While we clearly see a compelling long-term opportunity, we believe it is still early in Cerebras’ journey as a public company. It has an interesting position in the AI infrastructure market, but the timing is not right yet.

The Aurelion Team

Questions? Reach us directly on Substack or at contact@aurelionresearch.com.

Disclosures & Methodology

All forecasts and estimates are based on publicly available information, management commentary, and our own modeling assumptions. This report reflects independent analysis by Aurelion Research. All opinions and estimates expressed herein reflect the author’s judgment as of the date of publication and are subject to change without notice. This publication is for informational and educational purposes only and does not constitute investment advice, a solicitation, or a recommendation to buy or sell any security. Aurelion Research and its analysts may or may not hold positions in securities discussed. Use only where legally permitted.

The name suggests it covers only micro caps, but in reality several small-cap companies were present. We were there mostly for the small-caps, where trading volumes and liquidity are higher, which matters to us. Most companies were U.S., with a few Canadian ones.

We attended the Toronto edition last year and found several interesting ideas there, so we expected this trip to be worth it.

It was very much so.

Out of 138 companies, we narrowed the field to 14 through initial research and conducted 1-on-1 meetings with the CEO or CFO. From there, 6 names stood out as most compelling.

This piece is for investors looking for new ideas. While you should always do your own research, this should give you useful insights gathered from a week of research and in-person meetings with management.

Importance of being critical toward management

Being able to talk directly with management at these conferences is invaluable.

After a few years of doing this, we have developed a few techniques to get them to talk more on what they actually expect from the business. Last year, after the 1-on-1 meetings at Planet MicroCap Toronto, we classified the companies we liked and the ones we dismissed. You can find them here:

For transparency, the 5 companies we identified as compelling have returned an average of 35% since the conference in October 2025, compared to -20% for the 7 we dismissed.

The most important thing is to stay away from promotional CEOs. Last year at the Toronto conference, we fortunately saw right through ZOOMD.

Their goal appears to be to increase the stock price in order to then raise capital… The company (addtech business) ended up losing two major clients without new demand to fill those, which led to a -76% return over 8 months.

We are not adding any of the companies discussed in this piece to our main portfolio, the Aurelion Index, yet.

At this smaller company stage, much of the analysis comes down to whether management is outright promotional or whether they can actually deliver. Most of them were pitching us the dream. We asked several questions designed to keep them accountable and we’re now waiting a quarter or two for proof, alongside additional research on our side, before potentially adding one or two.

For micro and small-cap companies, the risk is generally higher, but some below can honestly become multibaggers.

Some readers may want to buy their favorite names here and be earlier than us, which is a completely fair approach as well. Last year, we used that same process (conference, then further research) and this is how we ended up finding a company in our portfolio.

To the best of our knowledge, everything we discuss is public information.

Structure

We start by ranking all the companies using charts based on:

1. Our estimated risk-reward

2. Short-term versus long-term attractiveness

3. Market capitalization

4. Revenue growth versus EV/EBITDA multiple

We then present the 6 companies.

We also discuss the 8 we dismissed after taking to management. However, we think that depending on your investment style, some may still be a fit, so we have still detailed them. If you want to get the most out of this article with limited time, the best approach is to read the 6 ideas, then quickly skim the dismissed companies in case you find something interesting.

As always, feel free to let us know your thoughts on the companies.

Table of Contents

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If you’re new here and haven’t really looked into CLBT yet, no worries, we’ve included our initial report below, followed by an updated version so you are fully up to date and have a better understanding of what we are discussing in this post.

Before starting our recap of the call with the company, below is what we will cover. We kept it brief and focused on the most relevant points.

Table of Contents

1. Go-to-Market Strategy & Sales Model

2. AI Revenue Potential & Monetisation Strategy

3. Competitive Positioning & AI Disruption Risk

4. Market Perception & Operational Execution

5. Revenue Mix Evolution

6. Long-Term Risk Assessment in an AI Context

7. Our Updated Price Target

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We have seen a number of reports suggesting ways to benefit from the 2026 Football World Cup. Most of them focus on GDP growth or broader economic impact for the three host countries (Canada, the US, and Mexico, or even potential winning countries), or on more speculative ideas such as trading futures, betting markets, or sports betting apps. But we are not traders, and we are not looking at betting-related themes or anything of that sort.

Instead, we identified a company that we expect to benefit not only from the World Cup, but also from other factors that support the long-term story, rather than a one-off event, which is also what makes the opportunity compelling.

Before getting into the company itself, here are a few things that stood out to us.

We believe it is significantly misunderstood by analysts covering the stock and by the market more broadly, and that is where we strongly disagree.

We can understand the sentiment, given that it is a company that was historically highly leveraged with a large debt burden, but that profile has been improving meaningfully over time, and in our view it is now a very different story that the share price has yet to reflect. We believe the setup is compelling for two reasons.

First, the World Cup acts as a near-term catalyst.

Second, it sits alongside our view that Latin America is still in the early stages of a broader bull cycle. That combination is what we find most attractive.

Table of Contents

1. Introducing the Company

2. Investment Thesis

3. World Cup as a Key Catalyst

4. What’s Going On With the Company?

5. Where We Differ From the Market

6. How We Value the Company

   6.1 Valuation Metrics

   6.2 Price Target

7. Key Investment Risks

   7.1 Downside Risks

   7.1 Upside Risks

8. Our Final Take

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After an intense Q1 2026 earnings season and a meaningful number of companies in our model portfolio running up (and some down), we are doing an update on every holding.

Quite a few stocks have been exited and added since the start of the year, either because the thesis played out or the risk/reward became less attractive.

Even though we cover these stocks regularly in separate posts and in our Substack chats, getting a clean view in one place just makes sense.

Every stock that we hold and mention here is a company we believe is a buy right now. In our view, there are no “old stocks” that have run up too much. If there were, we would have removed them and of course announced it.

We always try to speak with the management teams of our companies, usually the CEO, CFO, or Investor Relations, and have included what they told us below. We believe this is one of the best ways to develop a long-term edge and a deeper understanding of a company compared to the market.

In addition to having a specific thesis for each company, most of our holdings are supported by broader investment themes, which we believe make them compelling investments over both the short and long term.

With 19 companies, we keep the article concise and only discuss value-add information. Links to the full in-depth report for each company are included for further reading.

Our model portfolio, that we called the Aurelion Index, consists of our current highest-conviction equities, and is available to paid subscribers here.

As always, anyone can view the real-time performance on Plutus here. This is what it looks like as of June 4 (117% since inception on June 30, 2025):

Thank you for following our work. Below are our current best ideas.

Several more are on the way!

Feel free to ask questions in the comments, we always try to answer all of them.

Current Portfolio Positions (June 4, 2026)

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We do not add positions often. When we do, it is because we have done the work, the timing is right, and we have genuine conviction. This is one of those moments.

It operates in one of the most defensible corners of the semiconductor value chain. The kind of business where customers do not switch suppliers, where expertise takes decades to build, and where the AI infrastructure wave creates demand that has nowhere to go but up. Very few companies in the world can do what this one does, and that is precisely why we want to own it.

While the world debates which AI model wins, China is building the infrastructure to make the entire debate irrelevant. And while most investors are focused on who makes the chips, we think the real opportunity sits one step earlier. In what makes the chips possible in the first place.

China is quietly winning the chip war. Morgan Stanley estimates the domestic self-sufficiency ratio has gone from 10% in 2021 to 41% in 2026, with industry projections pointing to 86% by 2030.

We know that sounds optimistic. But think about BYD. A decade ago, most people in the West had never heard of them. Today they are the largest electric vehicle company in the world, outselling Tesla in most markets. That did not happen by accident. When China commits to leading a sector, things tend to move faster than the rest of the world expects.

Semiconductors are following the same path. US export restrictions only accelerated that by removing any remaining hesitation in Beijing. Cutting off access to leading edge technology turned chip self-sufficiency from a long term goal into a national obsession backed by unlimited resources.

We want to be clear about something. We are adding this name because the fundamentals and timing align, the way they always have at Aurelion. This has nothing to do with chasing AI momentum. We have been early on oil tankers, dry bulk, uranium, and financial companies. We apply the same discipline here.

The segment we are most focused on within this theme is Wafer Fab Equipment, or WFE. Every time chip complexity increases, manufacturers need more equipment to process each wafer. That relationship is not going away.

According to Counterpoint Research, total WFE revenues grew 12% YoY in 2025 to $143.1B, driven directly by AI infrastructure buildout and surging demand for leading edge logic, High Bandwidth Memory, and advanced packaging.

The top five manufacturers alone grew revenues 14% to $114.6B. Counterpoint forecasts another 11% growth in 2026, reaching $159.1B.

The more complex the chip, the more equipment it takes to build it. That is the thesis, and it compounds with every new generation.

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His view was simple: insurance companies collect cash upfront and pay claims later, creating powerful long-term compounding when managed properly.

In his own words: "The best investment you can make is in insurance companies. They take in money before they pay it out." We share that view, which is why insurance remains a core focus of our financial coverage.

Financial companies are not always the easiest businesses to analyze. The accounting can be complex, the numbers move around for reasons that have nothing to do with the underlying health of the business, and it is easy to draw the wrong conclusions from a headline number. That is exactly why we go through the earnings reports, the calls, and the filings, so we can separate what actually happened from what the numbers appear to show.

Both companies in the space that we hold in the Aurelion Index recently reported Q1 2026 earnings.

In this report, we go through both quarters in detail, why we hold them, what management said, and our view on what it tells us about each business.

You will also find our full portfolio and current weights at the end, which you can always access here as a paid subscriber.

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TLDR: Most earnings reaffirm our view and increase our confidence in the investment case, but a few raise red flags that we are monitoring and looking into. All prior trades were discussed & announced in our Substack Chat.

We would be happy to hear your thoughts on earnings, we also hold the stocks!

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CNC is the largest holding of our portfolio, the Aurelion Index, with an 8.4% weight vs our 5.7% average weight.

Report following our initial highlight:

On another note, a well-known investing mistake is falling in love with a stock, and it’s especially easy when a CEO tells the story. Part of their job is to market the company to investors. We stay cautious and critical of the story, but we believe this opportunity genuinely stands out.

Key Takeaways from Our CEO Call

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Today, we are adding a new stock to the Aurelion Index.

In a market as uncertain as the one we face today, you may have noticed that we are adding more defensive names to our Index. This does not reflect a preference for lower returns or reduced upside elsewhere. In fact, we believe that as inflation persists and the consumer weakens, the market will increasingly reward defensive plays. We are currently navigating another energy shock driven by the conflict between the US and Iran in the Middle East. While the inflationary impact might not be as severe as the 2022 shock in Ukraine, the effect is already visible.

In this environment, we believe our “defensive” positions are tactical choices designed to capture alpha while the broader market struggles with volatility.

The data confirms our view that defensive stocks can extend beyond a simple safety net, and that, in fact, they can serve as a powerful tool for outperformance when energy costs spike. Looking at the four major energy shocks since 1973, defensive names have consistently beaten the S&P 500. During the 1979 Iran Revolution, these stocks delivered a 43% return.

As you can see above, they outperformed the broader market by 17% as inflation peaked. Even during more recent events such as the 2022 Ukraine invasion, defensive plays protected capital better than the average stock.

Performance in Inflationary Environments

The bottom chart shows that defensive stocks tend to perform better during inflationary shocks. When the economy faces rising prices, defensive names deliver forward 12-month returns of 7.5%. This is a significant increase compared to 4.5% in non-inflationary periods. This gap exists because these companies often have the pricing power to pass costs on to consumers.

As we navigate the current tensions in the Middle East, which appear far from over, history suggests that holding these positions is a smart way to stay ahead. They offer a combination of lower risk and higher relative returns while the rest of the market struggles with a weaker consumer and rising energy bills.

Table of Contents

1. New Position Overview

2. Investment Thesis

3. The Business Model

4. The Supply Gap Is Widening

5. Investment Market Overview

6. Development Monitor

7. Growth Strategy and the 2028 Plan

8. Capital Allocation & Portfolio Quality

9. Debt & Capital Structure Analysis

10. Valuation Analysis

11. Key Risks to Our Thesis

12. Our Final Take

This Real Estate company recently delivered another strong quarter, with margins once again outperforming. It is not a REIT or a pure real estate model, but a differentiated platform that gives it an edge and supports continued performance.

Its new assets are generating healthy margins of ~45%, which we believe reinforces management’s capital allocation ability and the earnings power of recent M&A. We see this as a well-run company that offers investors upside and durable earnings growth, while also providing downside protection supported by a strong net asset value (NAV).

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By 2024, US credit card debt had reached all-time highs and payment delinquencies were trending upward.

Buy Now, Pay Later boomed.

When consumers are financing even everyday purchases like a burrito, it speaks about the underlying health of the economy.

However, the situation was stabilizing. Fed rate cuts began to take effect and the AI boom was fueling optimism of productivity gains.

The new Republican administration was promising affordable homes, lower energy prices, and a growing job market. Consumer health and investor sentiment finally got a breath.

We can see in the data from the charts above and below that consumer health began to improve in late 2024.

2026: Consumer Health Weakens Again

The two factors that have turned the recovery into what we believe is a continued period of weaker consumer health are AI and oil.

AI was supposed to be the “fix”. Productivity gains were expected to lift wages, justify high stock market valuations, and ultimately put money back into consumers’ pockets. That thesis is now under serious pressure.

First, AI driven job loss is looming over white-collar work. While some AI-related job cuts are simply a way for companies to explain broader layoffs aimed at improving margins, the overall trend is clear.

The real damage shows up in decreasing entry-level hiring. Roles that used to absorb hundreds of thousands of new graduates, such as junior analysts, entry-level coders, and compliance work, are now being done by AI tools.

The chart below shows the result: the share of new graduates among new hires has fallen sharply at both large tech firms and startups.

Meanwhile, the stock market continues to price in strong productivity gains. The S&P 500 trades at a forward P/E of 20.9x, elevated versus its long-run average of 16.6x. This premium implies sustained earnings growth, which in turn depends on meaningful productivity gains from AI.

However, the evidence so far points to diminishing near-term returns on AI investment. Companies are committing significant capital to infrastructure, yet the economic payoff at the consumer level has yet to materialize.

And now, disruptions in the Strait of Hormuz are driving oil prices higher, with consumers facing a potential 25–30% increase in fuel costs at the pump.

Despite rate cuts, mortgage rates have stayed higher than expected.

Right now, rising oil prices and inflation concerns are offsetting the mechanical impact of prior Fed rate cuts. This has kept housing in both the US and the broader G7 markets largely unaffordable for most households.

The Setup

We do not expect a significant market crash, but we believe this creates a very attractive setup to invest in companies that benefit from a weakened consumer. Rising debt, weak housing affordability, AI-driven job anxiety, and now a ~$100/barrel oil shock are all compressing real disposable income.

Historically, pawn shops, discount retailers, thrift stores, and dollar stores outperform in these types of environments. Certain defensive names have already started to move. The question is which high-quality names remain undervalued before the market reclassifies them as defensives.

The company we are adding to the Aurelion Index is an under the radar consumer defensive that we believe should trade at a higher, more normalized multiple. It has not received the attention it deserves. It is practically forbidden. That is exactly what makes it attractive to us.

Table of Contents

1. Company Description

2. Investment Thesis

3. Canadian Market Outlook

4. Business Overview

5. The Profit Advantage

6. Strategic Analysis

7. Best-in-Class Value Positioning

8. Macro Environment

9. US Market Overview

10. Operational Margin Pressures

11. Mitigating Factors & Efficiency Gains

12. Valuation & Price-Targets

13. Key Risks

14. Our Final Take

1. Company Description

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We will not add Amazon (AMZN) to the Aurelion Index because it exceeds our $50M to $15bn market cap mandate. That said, we find the current setup highly attractive. We are confident enough in this thesis to buy shares in our personal accounts, something we rarely do for mega-caps, as we typically find more edge in small caps.

Introduction

We almost never analyze mega-cap companies, but today we choose to cover Amazon. You might wonder why we are stepping outside our usual focus.

We believe the setup is favorable for a move higher.

We almost never look at the mega-cap giants, but we make an exception for Amazon today. The current setup looks too good. We believe the market mispriced the stock. Right now, it trades at 10.5x estimated earnings, which sits 44% below its 10-Y average of 18.6x. High-quality returns often happen when a market leader faces such a huge disconnect from its historical value.

Valuation Gap Extends to Retail: AMZN Below Walmart’s Average

We view this as a rare chance to get ahead. For the first time in a long time, Amazon appears significantly cheaper than Walmart. While WMT trades at 20.4x, AMZN sits at just 10.5x.

This rarely happens for a company that dominates tech and cloud computing. Instead of the typical high-growth premium, the market treats Amazon like it has less value than a standard grocery chain. We expect that gap to close as the company hits its stride and proves its earning power.

When you compare Amazon to its internet peers, the valuation looks even more disconnected. At 11.0x projected 2026 EBITDA, the stock trades at a discount to nearly everyone in the group. Companies like Uber, Airbnb, and Google all carry higher multiples. Even DoorDash trades at 18.4x, which is nearly double the valuation of AMZN. This price tells us the market expects a permanent slowdown, but our work suggests a recovery is coming. This low entry point should provide a safety net.

AWS: The Engine of Growth & Profit

AWS remains the most important segment for Amazon.

While the cloud business makes up 18% of the $717B in total sales, we estimate it provides 57% of the company’s operating income. In 2025, AWS generated $45.6B in operating profit with a 35% margin. Revenue for the segment grew 20% for the full year, with growth reaching 24% in the final quarter. As the dominant global cloud provider with a 30% market share, AWS serves as a strategic piece of the world’s AI infrastructure.

Resilience in the Retail Business

Amazon’s position in retail is still strengthening. We estimate the gap between it and competitors is widening. It now accounts for over 40% of the US eCommerce market. This massive scale lets them keep inventory closer to customers than any other player. Most of this logistics advantage now runs on autopilot, with robotics handling about 75% of global delivery volume.

This creates a cycle where higher volumes lead to faster deliveries and lower costs. These improvements naturally attract more shoppers. As they integrate more robots into retail, we project that efficiency will continue to climb.

A Familiar Setup: GOOGL Then, AMZN Now

GOOGL sentiment bottomed in 1Q25 amid “AI loser” concerns and search disruption risks, then re-rated as Gemini progress validated its AI strategy, now trading well above its 10-year average.

We see a similar sentiment and valuation inflection emerging for AMZN.

Amazon’s Moat: Fading or Getting Stronger?

1. Retail Growth Dynamics

Amazon’s dominance in retail is widening rather than merely holding steady. While many traditional moats are being challenged by AI, Amazon is using technology to distance itself from the competition. With more than 40% of the US eCommerce market, the company has reached a level of scale that allows it to position inventory closer to consumers than any other player.

This logistics advantage is now heavily automated, with robotics playing a role in ~75% of global delivery volume. This creates a self reinforcing cycle where higher volumes lead to faster deliveries and lower costs, which in turn attract more customers. As robotics continue to be integrated into processes across the retail operations side, efficiency can continue to increase.

2. Capital Efficiency & ROIC

Amazon looks like a cash hungry machine because retail and AWS cost so much to build. However, the company generated a surprisingly high return on invested capital of 15% in 2025. This proves that the heavy spending on logistics and data centers actually pays off.

Incremental AWS Revenue & Capex

Oppenheimer expects AWS revenue to hit $194.8B by 2027.

By that time, AWS will likely account for 84% of total company spending. Between 2024 and 2027, Oppenheimer estimates that $104.1B in new revenue will outpace $100.9B in new spending. This points to an efficient investment cycle with strong returns. In retail, the setup allows suppliers to effectively fund growth. When revenue grows faster than spending, the infrastructure cycle is maturing and becoming more profitable.

3. The Valuation Anomaly

We find the most compelling part of the thesis in the current valuation disconnect. Applying the trading multiples of physical retailers like Walmart (43.5x NTM P/E) or Costco (48.4x NTM P/E) to Amazon’s retail and advertising segments implies the market assigns little to no value to AWS.

By that logic, anyone buying the stock effectively gets the world’s leading cloud platform and a $68.6B advertising business almost for free.

4. The Data Advantage

Amazon’s competitive edge is further solidified by a data advantage that physical retailers cannot replicate. Beyond knowing the purchase history of every customer, the platform tracks exactly what products were considered and then passed over. This first party data is now being extended beyond Amazon’s own properties through its DSP, allowing advertisers to target consumers across the open web with surgical precision.

How We See It

We view this as a massive dislocation in the market. The valuation gap looks extreme with the stock trading at 10.5x NTM EV/EBITDA.

This sits 43% below the 10-Y average and far below Walmart. While Walmart owns a massive global footprint and continues to build its own delivery networks, the retailer lacks an AWS equivalent. We believe this discount makes no sense. This offers an exceptional entry point for a business in the early stages of an AWS re-acceleration cycle as AI usage grows.

We think the market is offering an opportunity here.

Favorable Set-up for an AWS Re-acceleration Cycle

We believe the setup for AWS looks favorable as the segment enters a clear reacceleration cycle. After hitting a low of 12% growth in mid-2023, the business turned a corner. The trend climbed steadily upward, with growth rates returning to the 20% level as 2025 closed out. This indicates the slowdown has ended and the growth engine is running again.

The backlog growth signals a massive revenue catch-up. The backlog reached $244B at the end of 2025, representing 38% growth. Jefferies projects a surge to $344B in early 2026, especially as major partnerships like OpenAI add to the pile. This pipeline provides a long runway for future revenue.

The profit story appears equally compelling. Operating margins recovered sharply from the lows of early 2023 when they dipped to around 24%.

We saw a strong bounce back with margins hitting record highs of 40% in early 2025. By the end of the year, they achieved a healthy 35%. This level sits comfortably above the long-term average of 32%.

AWS Margin Expands to 35%

Leadership remains confident in AI demand. The CEO notes capital spending follows workloads growing faster than expected. The CFO highlights that margins improved by 0.4% YoY. We believe these factors confirm that the investments in infrastructure already generate strong returns.

AWS Revenue Upside

When we look at Morgan Stanley’s revenue forecast, the estimates imply a yield on Capex that is ~50% below the long term average. This points to meaningful upside surprise potential, and we share that view.

AWS Yield on Capex Below Historical Average

Morgan Stanley’s current model assumes that for every dollar of Capex, the incremental revenue will be far lower than historical trends. Specifically, they project yields between $0.21 and $0.42. This is significantly lower than the long term average, which sits between $0.57 and $0.95. If AWS can deliver efficiency even partially closer to its historical standard, the actual revenue growth will likely exceed Morgan Stanley’s conservative estimates.

Quantifying the Upside of an AWS Separation

Scotia highlights the potential gains from spinning off AWS into its own company. A standalone AWS would likely trade at a higher price than it currently does as part of the consolidated group.

This premium comes from better investor clarity and the removal of retail spending from the valuation. More importantly, it allows AWS to sign cloud partnerships with retail competitors who currently avoid the platform because of conflicts of interest.

The retail business also benefits from a cleaner story. Management becomes directly accountable for how they spend money, and an independent board ensures the focus remains entirely on retail execution.

Historical data from other large-cap tech spinoffs suggests this move could lead to 15-30% in extra returns over the first 24 months. By simply removing the conglomerate discount, the market could surface several hundred billion dollars in total value.

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We are adding this stock to the Aurelion Index today.

This piece covers a small, under-covered Canadian life insurer that we believe is trading at a significant discount to fair value based on peer multiples and our own conservative analysis.

This insurer trades at a modest fraction of peer multiples based on book value per share, despite strong growth across segments (40%+ growth in core earnings to shareholders in 2025) and conservative risk parameters in-line with peers. We think the primary reason for the discount is liquidity constraints, which we think will ease as the company continues to grow and eventually sees more attention from investors and sell-side analysts.

Despite the low liquidity and small size negatively affecting valuation, we believe this company presents a great opportunity for long-term investors.

We think this company will continue to grow book value per share at strong rates, while simultaneously the discount will be addressed as liquidity in the shares slowly increases over time, driven by strong financial performance.

Sporting a dividend yield over 4.5%, we think this is an opportunity for long-term investors to ‘get paid while you wait’ for the discount to close.

Table of Contents

0. Introduction

1. Company Overview

2. Insurance Risk Measures

3. Discount to Intrinsic Value

4. Price-Targets

5. Key risks to the Thesis

6. Our Final Take

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A deep dive into our recent new addition to the Aurelion Index

Stevanato has the hallmarks of a great compounder: a clear moat, strong revenue growth, and an attainable margin expansion story.

We added STVN to the portfolio on March 3rd, and the stock jumped 19% the following day after earnings. Since then, the stock has come down and is back close to previous levels, as discussions during the earnings call were slightly worse than the market expected. However, the main driver was the Iran-US conflict, which led equities down significantly.

This is the full deep dive we promised when we added STVN to the portfolio on March 3rd. It adds our complete financial model, price targets, and valuation framework to the initial note, along with a much deeper look at the industry, the products, and the competitive positioning.

We spoke with investor relations, an IQVIA researcher, and a practicing physician. You will find their insights throughout the report especially on GLP-1s giving us a different perspective than what the market currently reflects.

The mix of earnings growth and business quality is rarely seen in life sciences, and we believe this is the first time STVN has traded at such a discount to peers despite that growth outlook.

We were previously invested in the stock in late 2024, when the company was going through its destocking situation, and successfully exited in mid-2025. In our opinion, the stock often experiences strong swings that are not always warranted.

Table of Contents

1. Business & Operations Overview

2. Industry Overview

3. Geographic Footprint and Customer Proximity

4. GLP-1s: Analysis of the Impact

5. Takeaway of our Discussions with Industry Experts

6. Our view of Q4 2025 Earnings

7. Investment Thesis

8. Forecasts, Valuation & Price Targets

1. Business & Operations Overview

Stevanato Group (NYSE: STVN) is a leading global provider of integrated drug containment, delivery, and diagnostic solutions for the pharmaceutical and biotechnology industries. Founded in 1949 and headquartered in Italy, it serves as a strategic partner to the world’s top 25 pharmaceutical firms.

A simple example helps illustrate the role Stevanato plays. In a weight-loss injection pen, such as those used for GLP-1 drugs, Stevanato likely produced the internal glass cartridge, the specialized coating that helps prevent the drug from sticking to the glass, and potentially even the equipment used by the pharma company to fill that cartridge.

The Specced-In Moat

Most people hear “glass manufacturer” and think commodity. This is definitely not the case and important to address before analyzing this business.

The glass Stevanato produce is an engineered, drug-specific containment system, developed and validated in direct partnership with the drug it will carry for its entire commercial life. The business implications are major.

The Lock-In Starts Years Before a Drug Reaches the Market

When a biopharma company develops a new drug, it doesn’t just need to prove the molecule works. It needs to prove the entire delivery system works.

The syringe, the cartridge, the vial, all of it gets tested together with the drug for chemical compatibility, dimensional precision, and sterility integrity across the product’s full shelf life. This process runs through clinical trials, takes years, and costs millions.

Once Spec’d In, Switching Is Typically Irrational

Regulatory approval is tied to a specific manufacturing process, and that includes the primary packaging. Changing the container after approval is a full regulatory event. The biopharma company would need to file new applications, run new compatibility studies, and potentially redo clinical manufacturing batches. That process takes 2-4 years and costs tens of millions of dollars, for a change that often delivers zero clinical or commercial benefit. It is simply not a project that gets approved.

A Revenue Profile With Unusual Visibility

Once a drug launches, Stevanato ships containers for every dose sold, globally, for the entire life of that product. Volume scales directly with the drug’s commercial success. Management can map approved drugs across their customer base to projected dose volumes and model out revenue with a high confidence level. It functions less like traditional backlog and more like recurring demand.

Despite a destocking headwind in 2024 and one of the heaviest capex cycles in its history, Stevanato has grown its revenue base consistently and held margins remarkably well.

The Moat in Plain Terms

A competitor can build a better glass factory and undercut on price. What they cannot easily do is displace Stevanato from an approved drug without asking the customer to spend years and tens of millions of dollars for no tangible benefit.

More Than Just a Container: Engineering Solutions

What makes this business model even more interesting is that the spec-in relationship doesn’t stop at the container. Once a biopharma company has validated a Stevanato container, they still need industrial equipment to fill it at commercial scale. Stevanato builds that equipment too.

Because the machinery is engineered around their own container specifications, a customer using a Stevanato vial is naturally pulled toward using Stevanato’s filling lines. Introducing third-party machinery means new compatibility testing and new regulatory risk, making Stevanato the default choice across the entire production chain.

Not All Containers Are Equal

Stevanato has been steadily shifting its mix toward more sophisticated formats called High-Value Solutions, primarily ready-to-use, pre-sterilized containers that arrive at the pharma customer’s filling line already prepared, eliminating entire steps from their manufacturing process. These products are harder to make, harder to replicate, and are the preferred format for biologics, the fastest-growing class of injectable drugs.

The economics reflect that clearly. Per our management discussion, gross margins on these premium products run at ~55%, compared to ~25% on standard containment. Every percentage point of mix shift toward premium formats has an outsized impact on profitability. In 2019 these premium products represented 17% of revenue. By 2025 they reached 46%.

Customers

Stevanato has high customer concentration.

The top-10 share jumped from 41.7% in 2021 to 53.6% in 2025, and the single largest customer crossed the 12% threshold. We believe this is a direct consequence of the GLP-1 boom concentrating more spend with one or two massive buyers (Novo Nordisk and Eli Lilly).

STVN does not officially disclose its top customers, but we can reasonably assume the following as key customers:

This leads to a simple conclusion we discuss later in the industry overview: STVN health and growth is highly correlated with large Pharma health.

Company Segments

In addition to separating its revenue into 2 segments, Stevanato also reports its high-value solution revenue within the Biopharmaceutical & Diagnostic Solutions segment.

High-Value Solutions (46% of Revenue): The Main Engine

Three things explain the pricing power and the pace of growth:

1) Biologics are the fastest-growing drug class, and they are almost exclusively injectable. GLP-1s like Ozempic and Wegovy get most of the headlines, but the tailwind is broader: monoclonal antibodies, ADCs, biosimilars, and other complex therapies all require the highest-grade packaging that standard formats cannot provide.

2) HVS formats save pharma companies real money. Receiving pre-sterilized, pre-validated containers lets manufacturers eliminate entire steps from their fill-finish process. The higher unit price Stevanato charges is largely offset by cost savings on the customer’s end.

3) Customers rarely leave. Qualifying a new container for an approved drug is a multi-year, multi-million dollar regulatory exercise with no clinical upside. Nobody volunteers to do that twice. HVS formats are often co-developed alongside the drug itself and embedded directly into the customer’s production line, making switching almost unthinkable.

Other Containment & Delivery Solutions (41% of Revenue)

This bucket includes standard bulk vials, low-value syringes, cartridges, and in-vitro diagnostic containers. These are not exciting products, but essential ones.

The flattish to declining revenue in the last 2 years in other containment revenue has been driven partly by a deliberate transition, as the company shifts capacity toward a larger portfolio of high-value projects.

When Stevanato builds a new production line, it is increasingly choosing to fill it with premium formats rather than commodity vials. Some of what looks like “other containment” shrinkage is simply volume that has been upgraded and reclassified into the HVS bucket.

Engineering (12% of Revenue)

As you can see in the chart above, the engineering segment has been the problem child since 2023. However, per our conversations with management and other investors, and with the reaction we have seen in recent quarters, it is almost as if the market does not really care about its short-term performance.

For some quarters revenue misses significantly, but the investor base and, we believe, management have communicated well that revenues can be largely sloppy, and the stock does not move on significant beats or misses in that segment.

What we point out is that in 2023 and 2024 the company entered into a substantial amount of contracts that were not profitable. These contracts helped sign long-term revenue agreements and were positive for that purpose, but management has now decided to exit some of them as they were impacting the bottom line.

We do not put a high weight on this segment when analyzing the financials of the stock. Revenue and profitability will be sloppy. This segment is purely there to enhance the overall offering of the company.

A Word on the Pandemic Impact

Stevanato capitalized on a perfect 2021 IPO window, riding the massive wave of vaccine demand.

However, it’s no longer a 'Covid stock.' We’ve seen those one-time gains be completely replaced by robust, sustainable growth starting in 2023. STVN has successfully moved past its pandemic dependencies and is now growing on the strength of its core business.

The Destocking Situation: Why We Owned the Stock Before

We personally researched the stock significantly in the early 2025 period because for us the destocking situation was very interesting.

The stock came down very significantly in late 2024 as the expectations for sustained >10% revenue growth stopped. The company was now entering a destocking phase with its large customer, simply meaning that large pharma had ordered too much during COVID and would now order less. We saw this as a short-term noise and bought at a cheap price.

Note that this research was done by an analyst on the team, not officially bought through the Aurelion Index portfolio.

Stevanato by the Numbers

Revenue Targets

Management is currently targeting a return to low double-digit revenue growth of 10% to 12% following the weaker periods seen in 2024 and 2025. The main drivers are the continued mix shift toward high-value solutions and the strong growth of that segment.

Margin Evolution

Our take: margins were artificially high in 2022 and 2023, then artificially low in 2024 and 2025, and we are now in recovery and expansion mode.

Here is how we see the evolution:

2022/2023 Inflated baseline: Margins were artificially boosted by COVID-driven vial demand. This was not the true earnings power of the business.

2024/2025 Double headwind: Margins then got hit from three sides at once, creating a trough deeper than the fundamentals deserved.

First, destocking crushed volumes. Large pharma had over-ordered during COVID and simply stopped buying, pushing revenue growth negative for the first time since the IPO.

Second, the engineering segment deteriorated, adding a drag on top of the volume headwind.

Third, Stevanato was mid-way through a massive capex cycle, ramping expensive new facilities before they were generating meaningful revenue. This is the classic trough of a capital-intensive business investing ahead of demand.

By 2025 recovery had already begun as destocking faded and the new facilities started contributing.

The path to 30% is therefore not just high-value solution expansion alone. It is normalization from short term issues (facilities now productive, destocking over) layered on top of the high-value shift.

Management Target: From 25 to 30% EBITDA Margins

Management has previously targeted 30% EBITDA margins by end of 2027.

They have since stopped formally discussing this 2027 goal.

We expect the 30% target to slide toward the 2028 timeframe as new facilities ramp up and the high-value mix continues to improve.

As a reminder, high-value solutions carry ~2x the margins of the rest of the business. We calculate ~1.2% of margin expansion per year through 2030 from mix shift alone, simply as a result of selling more high-margin products.

This driver requires no cost cutting, layoffs, or restructuring, and should meaningfully improve margins over the coming years.

We like setups like this because the execution burden is lower, which gives us greater confidence that the margin improvement will actually materialize.

Most companies talk about margin expansion. In our experience, a large share end up behind schedule or miss those targets entirely.

Cash Flow Generation

The chart below captures the story well. The buildout of new manufacturing facilities required an unusually heavy level of capital spending, which drove negative free cash flow for several years. We now appear to be approaching an inflection point, with the major facility investment cycle largely complete.

Stevanato will finally have cash to distribute to shareholders.

Stevanato’s free cash flow profile is finally starting to improve.

After several years of heavy outflows tied to an intense investment cycle, the company appears to be entering a phase where that spending begins to convert into cash generation. As capex normalizes, financial flexibility should improve, with more room to reinvest, strengthen the balance sheet, and potentially return capital to shareholders.

Management

Skin in the game is substantial. The family controls 93% of the voting rights and 80% of the economic interest, with no evidence of meaningful insider selling. This is a business built over 75 years by a family whose wealth remains tied to the stock.

That long-term alignment shows in the company’s history. Stevanato was founded in Venice in 1949 by Giovanni Stevanato. His son, Sergio, transformed it into a serious industrial company and was later awarded the title of Knight of Labor by the President of Italy, one of the country’s highest business honors.

Today, the business is led by Franco Stevanato, Sergio’s son and the company’s current CEO, who grew up visiting his grandfather’s factory on Saturdays. This is a family that has spent 75 years building deep expertise in a single industry and turning that focus into a world-class business.

2. Industry Overview

End-Markets Driving the Stock

Stevanato is increasingly a biologics-driven business. High-value solutions, which are heavily tied to biologics and GLP-1 delivery formats, accounted for 46% of total company revenue in 2025 and grew 29% year over year.

The company is not evenly exposed across all end markets shown in the chart below. It is disproportionately positioned in the fastest-growing segments, specifically biologics at +15% CAGR and GLP-1s at +30% volume growth.

This is precisely what drives the revenue growth thesis and why Stevanato consistently grows 2 to 3x faster than the broader containment market.

Large Pharma Impact

Large pharma health matters, but less than many investors assume. The more important variable is biologics volume.

It is easy to link Stevanato’s performance to large pharma revenue, but that framing misses the core driver. Stevanato does not get paid when Eli Lilly or Novo Nordisk sells a drug. It gets paid when those companies manufacture and fill vials, syringes, and cartridges. That is ultimately a volume story. A pharma company can post a weak quarter because of pricing pressure or patent expirations and still be producing more units than ever.

For Stevanato, pipeline volume matters more than pharma profitability.

There are over 10,000 drug candidates currently in clinical development globally, with pharma companies spending over $300bn annually on R&D (IQVIA Institute for Human Data Science, 2024).

That pipeline has to be packaged, filled, and delivered. Biologics and gene therapies are forecast to represent over 60% of new drug approvals by 2030 (Deloitte Global Life Sciences Outlook, 2024). Stevanato is precisely positioned for that shift. Even in a world where large pharma margins compress, the volume of injectables being manufactured keeps climbing.

The scenario investors should watch is a prolonged collapse in large pharma R&D spending, which could slow new drug launches and reduce demand for high-value packaging formats. But this would need to be severe and sustained to meaningfully dent Stevanato’s trajectory, given how far ahead of current demand the pipeline is.

Our view is that investors should not spend much time worrying about pharma company’s quarterly earnings. The structural question is whether global biologics volume keeps growing. Every credible forecast says yes, and that is the only datapoint that truly matters for Stevanato’s long-term thesis.

Competitive Space

The competitive landscape is an oligopoly.

The companies capable of producing pharmaceutical-grade syringes and cartridges at commercial scale are essentially four: SCHOTT Pharma, Gerresheimer, Stevanato, and Nipro. Together they produce around 3 billion pharmaceutical syringes per year. This is not a fragmented market where a new entrant can show up and take share. It is a small club of highly specialized manufacturers with decades of regulatory history, validated processes, and deeply embedded customer relationships.

Worth noting: it is standard practice in pharma to qualify two suppliers for any given drug program, typically pairing two members of this oligopoly together, for example Stevanato alongside SCHOTT, to ensure supply chain resilience. This means Stevanato does not need to displace a competitor to win business. It simply needs to be one of the two approved suppliers.

Vertical integration separates Stevanato from the pack. Unlike peers, Stevanato controls around 80% of its supply chain, from glass forming to packaging machinery, enabling customized automation that materially reduces total cost of ownership for customers. Most competitors own one part of the value chain. Stevanato can offer containment, delivery format, and the manufacturing equipment to fill it, all under one roof.

The GLP-1 wave is making the oligopoly tighter. All four players are racing to add capacity simultaneously. SCHOTT Pharma announced a $371M facility in North Carolina targeting GLP-1 containers, expected operational in 2027. Gerresheimer acquired Bormioli Pharma for roughly €800M to consolidate its position. Stevanato is doing the same with its Fishers, Indiana facility.

As you can see above, the capital requirements to compete at this level are enormous, which reinforces the barriers to entry rather than weakening them. A new competitor would need to spend billions and wait a decade before being qualified by a major pharma company.

3. Geographic Footprint & Customer Proximity

Stevanato operates nine manufacturing plants globally. What is striking about this footprint is that the company has quietly built one of the most geographically strategic supplier networks in pharma packaging, with facilities in every major biologics manufacturing hub in the world.

Over the past several years, Stevanato has committed billions in capital to two regions: northern Italy and Fishers, Indiana. When you map those locations against where the world’s largest GLP-1 drug manufacturers are building their own production capacity, the overlap is clear.

Fishers sits 35 miles from Eli Lilly’s Lebanon, Indiana campus, where Lilly is spending up to $27 billion manufacturing Mounjaro and Zepbound.

We infer Lilly is the largest customer. We cannot confirm it, but we are comfortable making that call based on the geography, the product alignment, and the capital commitment timing on both sides.

This brings us to the GLP-1 risk. Stevanato has concentrated a significant portion of its new capacity in facilities that are, by our analysis, heavily oriented toward GLP-1 injectable demand. If that bet is right, Fishers becomes one of the most strategically valuable pharmaceutical packaging facilities in North America. If GLP-1 injectable volumes shrink, the ramp assumptions for that facility come under pressure. We discuss exactly that risk, and why we think it is overstated, in the section that follows.

4. GLP-1s: Analysis of the Impact

GLP-1 oral approval fears are the primary reason the stock has sold off since the start of 2026.

What are GLP-1s and Why do They Matter for Stevanato?

GLP-1s are the blockbuster weight-loss and diabetes drugs you have probably heard of: Ozempic, Wegovy, Mounjaro, Zepbound. They are injected, typically weekly, using a precision glass cartridge or syringe. Stevanato makes those containers. As GLP-1 demand exploded, Stevanato became one of the key beneficiaries, with management confirming that GLP-1 related products represented approximately 19-20% of total company revenue in 2025, growing more than 50% year over year.

Why is the Stock Down?

In late December 2025, the FDA approved an oral version of semaglutide, opening the door for some patients to take a pill instead of an injection. If that shift becomes meaningful, Stevanato would sell fewer glass cartridges. That is the core concern. It is easy to understand, and the stock sold off sharply on the announcement.

From the patient’s perspective, the appeal is also straightforward. Taking a pill is clearly more convenient than a weekly injection, especially for those who prefer to avoid needles.

The market’s question is therefore simple: if GLP-1 therapies move in an oral direction, does Stevanato’s growth story begin to weaken materially?

In short, our view is that this fear is real but significantly overstated, and the IQVIA research we cover in the next section explains why. The short version: orals and injectables serve different patient needs, the injectable volume already locked into approved programs is not going anywhere, and the total GLP-1 market is still in its earliest innings.

5. Takeaway of our Discussions with Industry Experts

IQVIA Researcher

What is IQVIA and why does it matter for this thesis. IQVIA is the gold standard data provider for pharmaceutical market intelligence. Stevanato itself uses IQVIA forecasts to plan capacity investments, meaning the same data shaping their internal decisions is available to us. We had a conversation with a researcher (we are keeping the name private) at the IQVIA Institute and also had access to their latest public report, “The Global Use of Medicines 2025: Outlook to 2029”, available freely on their website.

His take on the current efficacy of Oral GLP-1s. Oral bioavailability for peptides remains below 1% versus more than 50% for injectables. Oral semaglutide also requires ~70x more active pharmaceutical ingredient per dose, creating worse unit economics at scale. The compliance burden of daily oral dosing with strict fasting requirements is a real barrier, and the industry is actually moving toward longer-acting monthly injectables, which only deepens the moat for precision injectable packaging.

The IQVIA researcher was direct about Orals taking share. Orals will take share, particularly among needle-averse patients and those needing only modest weight loss. The pipeline has over 50 oral assets in development, and next-generation small molecule formats will be more competitive than today’s oral semaglutide. If oral penetration accelerates faster than expected, a portion of future injectable volume growth would simply be foregone.

On oral GLP-1 risk to Stevanato specifically, he was relaxed. Even if oral formats gain share over time, the transition would be gradual. The regulatory switching costs alone make a rapid format change essentially irrational for pharma companies mid-lifecycle.

He was also bullish on the biologics pipeline. Obesity drug spending is projected to grow at a 23% to 26% CAGR through 2029, while less than 10% of the obese population has been treated so far. Oncology spending is expected to reach $441bn annually by 2029. His framing was clear: this is not a demand issue, it is a capacity issue.

Practicing Physician

His take was that patients find the oral semaglutide routine genuinely difficult. Empty stomach, then 30 minutes with no food or liquids, every single day. Weekly injections are easier to stick to for older and chronic patients. In his view there is a use case for both. The industry has already acknowledged this, which is why the real innovation is heading toward monthly injectables, not away from injectables altogether.

Our Thoughts on GLP-1s

Let us be clear: oral GLP-1s are a headwind. If they never existed, the injectable volume story would be cleaner and the growth runway longer.

The stock does not currently deserve its $33 peak of 2023. The question is not whether orals create some competitive pressure, they do, but whether they actually displace injectable volume in any meaningful way. Our conclusion, is that they largely do not.

Another IQVIA publication, “Oral Obesity Therapies: Holding the Key to the Future” states that orals are best positioned as maintenance options following injectable induction, not as replacements. The two formats serve different roles in the journey.

On the broader GLP-1 volume story, IQVIA is unambiguously bullish.

In their November 2025 report “GLP-1 Impact: How GLP-1s Are Changing the Diabetes Treatment Paradigm,” IQVIA authors Luke Greenwalt and Jeff Thiesen document GLP-1s reaching $110bn in global sales in 2024. Yet less than 10% of the obese population has been treated by the drug. By May 2025, GLP-1s accounted for 52% of all diabetes prescriptions, up from just 18% in 2020. In our view the runway for volume growth remains enormous.

We believe GLP-1 injectable volumes will continue to grow, supported by expanding global demand, the large share of severe diabetes and obesity cases that still require injectable efficacy, and older or chronic patients who are more likely to remain on injectable therapies.

The stock does not deserve to return to its prior peak, in our view, because this is a real long-term headwind. At the same time, the selloff appears excessive, and we believe the shares are clearly oversold.

To put the oral GLP-1 concern in perspective, even if Stevanato were to lose 50% of its entire GLP-1 revenue tomorrow, the stock would still trade at roughly 13.8x EBITDA. The market was routinely willing to pay a higher multiple than that before GLP-1s were even part of the story.

We will continue to monitor pharmaceutical volume trends across oral and injectable GLP-1s closely as we stress test the thesis.

6. Our view of Q4 2025 Earnings

We added STVN to the portfolio on March 3rd, ahead of earnings, expecting a beat. That is what we got. The stock moved +19% the following day.

The Quarterly Numbers

The quarter was clean across the board. Revenue came in at €347M, ahead of estimates, driven entirely by the core business.

EBITDA came in at €98M, significantly above estimates at €92M.

Free cash flow was + €1.5M, versus estimates of negative €39M.

The engineering segment missed badly at negative 30% revenue growth, but as we discuss in the business overview, the market does not move on engineering and neither do we.

The GLP-1 Disclosure

The most important moment of the call was management finally disclosing their GLP-1 exposure directly. GLP-1 products represented 19 to 20% of total company revenue in 2025 and grew more than 50% YoY. This was the first time management put a specific number on it.

Equally important was management’s commentary on 2026. GLP-1 revenue is guided to grow at a mid-teens rate. Running the math, if GLP-1 represents 20% of revenue and grows 15%, that alone contributes ~3% to total growth.

With management guiding to ~7.5% total revenue growth, the implication is that the other 80% of the business is growing at ~5.6%. Moreover, the number of customers ordering premium syringes for non-GLP-1 biologics increased 40% year over year. The growth story is wider than GLP-1s.

2026 Guidance

2026 guidance came in slightly below expectations. Many investors were anticipating closer to low double-digit revenue growth, but management guided for only 7.5%. Capital expenditure expectations also came in still slightly higher than the market had hoped, with 89% of being growth capex.

Our Takeaway

The beat was broad-based, the GLP-1 disclosure removed a key uncertainty, and the broader contribution from non-GLP biologics came in as a positive surprise. Guidance was slightly softer, however, as GLP-1 is set to contribute less to growth than some had expected. Even so, nothing in the outlook changes our long-term view of the setup or the quality of the business.

7. Investment Thesis

Our conviction on the stock has not changed. The reasons we own it today are the same ones we outlined in our initial report in early 2025.

1. Valuation Does Not Reflect Earnings Power

This impact is clear in the price history. Shares have traded in a wide range since 2021 and currently sit well below previous peaks. This compression happened even as revenue continued to grow and long-term demand remained generally steady. In our view, the market has priced in a permanent state of weakness instead of a temporary return to normal levels.

2. A Strong Free Cash Flow Inflection

At the same time, the financial profile is reaching a turning point. Free cash flow hit its lowest point in 2023 when capital spending peaked at nearly 40% of revenue during a major global expansion. That investment cycle is now largely complete. This shift changes the story of STVN from one that consumes capital to one that generates cash.

3. GLP-1 Fears Are Overblown

The debate around new drug delivery formats also adds to the opportunity. Management has already planned for these shifts by building flexibility into their production. These developments are well understood by the company and are not a surprise.

We see a business moving into a period of higher margins and cash generation while the stock price still reflects peak uncertainty. As spending declines and cash flow rises, we expect the valuation to follow.

8. Forecasts, Valuation & Price Targets

Financial Forecasts

Our revenue forecast is broadly in line with management’s target for low double-digit growth, while also reflecting lower expected growth from GLP-1. The main driver remains the continued expansion of high-value solutions.

We think this forecast appropriately ties revenue growth to the capital spending needed to support it. All of that growth is organic and does not rely on acquisitions. We are also around 1% above Bloomberg’s current revenue growth consensus.

Below is a snapshot of our financial model.

As you can see, our forecast implies a 18.6% earnings CAGR.

This is pretty much one of the highest in scaled life science companies.

Stevanato Financial Model Snapshot

Margins: We forecast margin expansion to come primarily from a richer mix of high-value solutions, with little contribution from other sources of improvement.

Depreciation Expense: Given the heavy capital spending over the past few years, we expect depreciation expense to keep rising and remain a drag on reported earnings.

Free Cash Flow: As noted earlier, FCF should turn positive as capital expenditures normalize. We estimate normalized EBITDA-to-free-cash-flow conversion at ~40% to 50%, which is reflected in our valuation. This remains a business that needs ongoing capital spending to support growth.

Our Valuation of Stevanato

There are important valuation implications to STVN requiring substantial capital investment to grow. The 40-50% cash conversion implies that at an 11.0x EBITDA multiple, we are effectively paying for a 22.0x FCF company. In our view this is warranted, as STVN is a high-growth, high-quality business.

However, a return to the prior 20.0x EBITDA multiple would imply roughly 40x FCF, a level we consider excessive.

As you can see below, historical valuation has averaged ~20x EBITDA, which at normalized free cash flow conversion implies ~40x free cash flow.

We think there are 3 significant drivers that institutional money managers like, that used to drive up the valuation.

1. The long-term contracts and specced-in moat give significant long-term visibility into the business continuing to exist, meaning we can be more certain applying a high multiple in 5-10 years.

2. A substantial biologics growth story. It is an easy trend to believe. Not only GLP-1, but many biologics require STVN, and STVN is undoubtedly very strong in their specific corner of the container industry.

3. An easy-to-believe margin expansion opportunity. The switch to high-value solutions is an easy sell for investors, as the company doesn’t even need to cut costs to significantly expand margins.

Below, we compare Stevanato with competitors and other companies operating in similar parts of the market. What stands out is that the stock trades at a higher valuation, but that premium is supported by meaningfully stronger revenue and earnings growth than most comparables, which in our view leaves the risk-reward compelling.

Stevanato vs. Peers

We use a long-term multiple of 10.0x EBITDA, reflecting where we think the stock will trade in 2030, implying ~22x free cash flow. We do not expect a sustained 20.0x EBITDA multiple like in the 2022-2023 period.

However, continued revenue growth, stronger cash generation, and a solid moat in the space support our confident use of that 10x multiple. This is also still below larger scaled peers, which is what Stevanato should increasingly resemble over time.

How Much Upside Do We See?

• 1-Year Price Target: $21 (39% upside)

• 5-Year Price Target: $36 (134% upside over a 5 year period)

$14 has been the floor the market has been willing to accept since the IPO in 2021. We are not technical traders, but we believe it is reasonable to say the business would need to deteriorate meaningfully from current levels to break below that threshold.

This is a loved stock among many funds, and we believe investors are simply waiting for perceived headwinds to clear before buying back in. In our view, a return to a $20 stock price is the most likely scenario, with limited downside at $15.

At this point we do not think we are catching a falling knife. The stock appears to have stabilized following the peak of GLP-1 fears.

Importantly, we view this stock as set for a sharp move on a positive catalyst. The most recent earnings were good, not amazing, and the stock still moved +19% in a single day. This is precisely why we like the risk/reward here. If the company misses next quarter we do not expect a similarly sharp decline, but if they beat expectations or raise guidance, we see the upside reaction as disproportionately large.

Current Analyst Recommendations

Analyst recommendations remain broadly unchanged despite the stock being down 28% year to date, with most maintaining Buy or Outperform ratings.

Key Risks

1. Key man risk. Franco Stevanato is both CEO and the embodiment of the family’s long-term vision. A leadership transition would create significant uncertainty around strategy and ownership.

2. US tariff and currency headwinds. Stevanato is an Italian company with significant US revenue exposure, making it vulnerable to both foreign exchange moves and evolving US trade policy.

3. Oral GLP-1 almost completely replaces injectables. If next-generation oral formats gain meaningful share in induction therapy, injectable volume growth would be heavily impaired. This is the risk we monitor most closely.

Our Final Take on STVN

Stevanato is a rare combination of business quality, earnings growth, and a mispriced valuation. The oral GLP-1 fear is real but overstated in our view, the destocking headwind is behind them, and the capex cycle that weighed on cash flow for years is nearly complete. The business is entering a period of higher margins and free cash flow generation for the first time since the IPO.

We hold the stock and will monitor GLP-1 injectable volumes closely as the key variable to stress-test the thesis.

The Aurelion Team

Disclosures & Methodology

All forecasts and estimates are based on publicly available information, management commentary, and our own modeling assumptions. This report reflects independent analysis by Aurelion Research. All opinions and estimates expressed herein reflect the author’s judgment as of the date of publication and are subject to change without notice.

This publication is for informational and educational purposes only and does not constitute investment advice, a solicitation, or a recommendation to buy or sell any security. Aurelion Research and its analysts may or may not hold positions in securities discussed. Use only where legally permitted.