Welcome to The NFTBC Digest, an email received by full NFTBC subscribers only.

From week-to-week, there is all manner of news, links, marginalia and other curiosities concerning NFTBC stocks that I might not otherwise share with you. So this is what The NFTBC Digest is all about. My thinking here is that you can simply scroll to whichever company you’re interested in and see very quickly if there’s anything notable that tickles your fancy and that you haven’t already seen. There won’t be a set frequency - I don’t want to publish for the sake of publishing. Sometimes The Digest might be weekly when there’s plenty happening, but there could be fewer Digests during earnings season or if news is slower.

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When I started looking at recently listed Ottobock (Ticker: OBCK) I was immediately intrigued, so I decided to write about it. Additionally, my impression is that global investors might not yet be especially aware of this German ‘hidden champion’. OBCK, with a market cap of around EUR 3.5bn, is the market leader in human bionics - most notably prosthetics, but also in tangential fields. The business itself has a long and colourful (if not especially public) history and its family owners have, I believe, built some quite compelling moats around it.

For various reasons I’m slightly behind schedule on getting this post out the door. Part of the reason for that is that I have been looking at OBCK fresh and the more I learnt, the more questions I had. There are numerous moving parts to understanding this business1 and various dynamics at play - I wanted to be sufficiently comfortable about them before writing to you about it all. Having done this now, one thing seems clear to me: OBCK is a very hard business to compete with and may even be a candidate for the most moaty business I’ve written about so far at NFTBC. In some instances, OBCK has exceptional pricing power. But I’m also pleased to note that in such instances its products bring tremendous value to their users - so long as reimbursement and access can be established. That’s all part of the story too. It’s also a largely recurring revenue business model with plenty of avenues towards durable growth - we’ll go into all of this.

My aim with this post is to try to bring OBCK newcomers up to speed in 40 minutes or so and to point you in the right directions should you decide to follow up with your own research. As a business with many thousands of SKUs, there is a lot that I won’t cover here, but I’m happy to continue the conversation elsewhere. Here’s what the basic layout will look like:

1. Introduction (free to read)

2. Background (partly free to read)

3. Basic thesis: Strategy, Moats & Optionality

4. Governance Structure & Management

5. The Business Today: Overview, Financials & Competitors

6. B2B: Products & Markets

7. B2C: Ottobock Patient Care

8. Risks / FAQ

9. Conclusions: 2026 & Beyond, Initial Thoughts on Valuation

While I do not yet currently own OBCK, I shall discuss later some of the conditions that could lead me to take action - potentially in the near term. As always, I will inform paying subscribers when and why I decide to acquire OBCK shares - should that time come. If you’re new to NFTBC, please check out this page for more information about the NFTBC approach and what to expect. I’ll no doubt make some mistakes in this post, which I shall endeavour to correct over time. With that, let’s get going.

[NFTBC does not give advice - please do your own research. I do not currently own Ottobock shares].

Introduction

For the last 100 years, OBCK has led the field in developing and commercialising next generation prosthetics. Most notably, in recent times, important developments include the microprocessor knee (MPK) - a breakthrough innovation that enables above-the-knee amputees to move with a more natural gait, safely tackle everyday tasks and even engage in much more adventurous pursuits. Today OBCK is the largest and most important prosthetics OEM by a wide margin - about 40% market share. Additionally, OBCK has been investing heavily into tangential fields in order to open up new and potentially even larger markets - more on that later.

While the company has only been listed since October 2025, we have sufficient information to know that OBCK has been a relatively consistent 7-8% top line grower for a long time. Revenue was under EUR 100m (equivalent) in 1990 - implying around 17x in 35 years or greater than 8% CAGR.

The numbers in the last several years also mask a more promising underlying story of 3-year ‘core’ organic revenue growth of 11%. With the company now close to having completed a series of non-core divestments, these revenue figures are now converging. Another compelling dynamic at play is the recent trend of margin expansion, which management expect to continue - we’ll get into some of the reasons behind that later. But first, some background…

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Background: History, the Näders, EQT & IPO

A Little History

For the particularly keen, there is a three volume book on the history of Ottobock. I’m afraid I haven’t read it - but I don’t think we need to go into deep history here.

The founder, Otto Bock, started the business in Germany in the wake of World War I. At the time, prosthetics were one-off crafted items, and as far as processes go, this one was highly inefficient given the elevated need at that time. Bock industrialised the process turning it into the serialised mass production of components. In time, the business came to be managed by Bock’s son-in-law Max Näder. Under Näder the business continued to launch a series of important innovations including the breakthrough Jupa knee joint with braking mechanism, myoelectrics that help users grab objects, plastic prosthetics as well as the modular system that underpins modern prosthetics today. In 1990, at the age of 28, Hans Georg Näder took charge as CEO - the grandson of Bock and the son of Max Näder.

Hans Georg Näder (HGN)

Given the various Näders involved in this story, I shall refer to Hans Georg as HGN from hereon to avoid confusion.

HGN has taken a fair bit of heat in the German business media over the years, for example for apparently taking cash out the business, raising debt and for buying shipyards, breweries and such others things that eccentric billionaires are wont to do. There’s even a website dedicated2 to posting largely negative content about the man - if you decide to research OBCK you’ll probably find it quite quickly. I’m inclined to leave such tittle tattle to one side. For one thing, up until the point when EQT acquired a 20% stake in OBCK, HGN basically owned the business outright and was free to run his affairs in any way he saw fit. One thing worth noting (and that OBCK commented on some years ago) is the importance of drawing a distinction between Ottobock SE & Co. KGaA (i.e. OBCK) and the family holding entity Otto Bock Holding GmbH & Co. KG - it seems journalists have not always done this. In the end, the latter changed its name to Näder Holding GmbH & Co. KG perhaps in part to help address the confusion. Needless to say, the affairs of the holding company and the other assets it owns, are not directly relevant to OBCK shareholders except to the extent I shall identify shortly.

With that out of the way, let us now consider some of the great strategic decisions made by HGN - if you’ll pardon me for going off on a brief tangent. The biggest risk with successful family owned businesses is the possibility of dilution to management quality over time. So it’s notable that the grandson of the founder has been able to act with great strategic foresight. OBCK’s most important product of the last 25 years has been the C-Leg microprocessor knee. The first ever fully adaptive MPK, it’s been fitted more than 100,000 times and continues to be the market leader (after numerous iterations and branching products). Since the turn of the century, OBCK has compounded MPK units at 20% per year. While they don’t break it out, I think we can infer that the C-Leg is a substantial percentage of total revenue. The MPK was originally pioneered by maverick Canadian engineer Kelly James in the early 1990s. Per Ottobock lore, HGN waltzed into a prosthetics trade fair and penned a deal with James there and then, having recognised the significance of the technology.

The OBCK PR department seem to make a big deal out of this in various places, which made me kind of suspicious and drove me to try and verify it. And… it’s true: Kelly James independently retold the same in an interview with his alma mater University of Alberta 15 years ago. The context is telling and worth expanding on:

[Kelly James] travelled around the world to conferences trying to sell his leg to a manufacturer. At trade shows, he walked from booth to booth with his prototype slung over his shoulder. But most manufacturers were reluctant. What James was selling was, in retrospect, ahead of its time. “They all said, ‘I don’t know, it’s pretty complicated.’ Remember, in 1992 people didn’t know anything about computers.” James persevered, even when people in the prosthetics field told him the idea was crazy. But in 1992, German prosthetics manufacturer Otto Bock approached James at a trade show. In a closed-room meeting with the company’s owner and top engineers, they made James a deal for the leg, on the spot. “What really surprised me about the meeting was that they were so respectful of the leg. After I had talked to all the American companies and they had just slammed the door in my face, I spoke to the German company and they were so, ‘Wow, this is really amazing, and how did you do it?’”

But there were obstacles to overcome along the way. Otto Bock nearly decided not to manufacture and sell the leg after one doctor’s experience. The doctor, an amputee, was impressed with the leg after wearing it around for a couple of hours. But when he took it off to put his old prosthesis back on, he fell down the stairs. The C-Leg was too good in the sense that it was dangerous for someone to readjust to a less-sophisticated prosthesis. Otto Bock executives were upset, says James. “They were saying, ‘This is a no-brainer, we’re not going to build this knee … we can’t put amputees at risk.’”

James managed to convince them otherwise. “Let’s just change the number of phases the knee goes through during a step,” he said. The idea of easily tweaking a few lines of code for the knee’s microchip was an eye-opener for Otto Bock. Over time, the phases of the knee evolved, eventually eliminating any phase where the knee is locked and anything that made the knee too complicated for users to figure out. The knee’s simplicity is one of its main selling points. “You don’t read a manual, you don’t understand it, you don’t think about it—you just walk,” says James.

It’s kind of interesting to me because HGN was still relatively young and had only been in charge a couple of years. Would a professional salaried CEO have made the same decision? Kelly seems to suggest not. In the event, OBCK spent 5 years in development and launched the C-Leg in 1997. And it’s taken decades to build the case for reimbursement and grow access - a journey that continues. It’s tough to imagine these sorts of long-range investments being made by a non-family controlled business.

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Welcome to The NFTBC Digest, an email received by full NFTBC subscribers only.

From week-to-week, there is all manner of news, links, marginalia and other curiosities concerning NFTBC stocks that I might not otherwise share with you. So this is what The NFTBC Digest is all about. My thinking here is that you can simply scroll to whichever company you’re interested in and see very quickly if there’s anything notable that tickles your fancy and that you haven’t already seen. There won’t be a set frequency - I don’t want to publish for the sake of publishing. Sometimes The Digest might be weekly when there’s plenty happening, but there could be fewer Digests during earnings season or if news is slower.

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First things first, I’m working on a couple of projects/posts in parallel at the moment. The first will be an under-the-radar name in the healthcare space - I’m hoping to get this one out soon-ish, so keep an eye out for that.

Second, last week I recorded a podcast with Bill Brewster on the the Business Brew - I enjoyed the conversation. We talked about NFTBC and spent a bit of time on REGN, BMW and one or two other names. You can listen here, if you would like to:

• Apple

• Spotify

Be sure to subscribe to the Business Brew if you haven’t already. Bill’s a thoughtful host and asks great questions - I can only hope that I answered some of them intelligently.

I think my weakest answer was to Bill’s question about what the process looks like at NFTBC. I sort of waved the question away by saying there’s no formula or rulebook that I follow - while this is effectively true, it’s also a bit of a cop out. As an independent analyst-writer I think I’ve elaborated pretty well by this stage on the what and the why (e.g. here, here and here). But not as much on the how - the process. I suppose the process, insofar as there is one, is just something I do without ever having formally codified it or putting much thought into explaining it. What follows, is a few brief thoughts on how I might have answered the question better.

It’s true that I don’t work formulaically. I don’t like to have too many rules, preferring the flexibility of more of a principles based approach (instructed by the what and why).

Idea generation

Most (if not all) of the ideas for businesses to write about are sourced independently. In other words, in most cases, I probably won’t have seen or read a write-up by someone else before I dive in.

In terms of leads, they really can come from anywhere. Quite often, leads arise unexpectedly when I’m looking at or reading about something tangential or maybe something altogether unrelated. Other times, when I’m at a bit of a loose end, I like to sift through long lists of stocks just to see if anything jumps out - although I don’t run screens. I quite like to work quickly and visually at this stage - bringing up lots of different stocks, displaying financials in charts, scanning through information about management etc. I pass over practically everything for one reason or another.

Research phase

Many ideas look interesting to me intuitively and quickly. The next step is then about figuring out if the intuitions were any good and unearthing important considerations that are worth understanding. My process then essentially revolves around figuring out which questions to ask and then trying to answer them in a satisfactory way. And the deeper I go, the more questions arise. When I start out I don’t even know what most of the questions are going to be. Some of these questions are undoubtedly stupid ones. Some are perhaps more intelligent. I continue in this iterative process until I’m comfortable that I’ve identified the most important aspects of the business for my purposes alongside the relevant risks and uncertainties (i.e. questions that cannot be answered, for the time being).

Similar to the output, the process is far more qualitative than quantitative. But it’s not to say the numbers are not important, they are. Actually I insist on a somewhat laborious process of extracting figures myself manually from years’ worth of financial statements. I’ve never really trusted the fidelity of third party data. But more importantly, I tend to find that the numbers tell a more instructive story when I pull them out myself. The very extraction process becomes a learning exercise and I’m more likely to notice things and ask questions along the way - rather than skipping straight to a pre-populated Excel sheet.

It’s always my ambition to rule out dead ends as quickly as possible, before I invest too much time. But, alas, very occasionally I might get quite far before I assess the opportunity to be a no-go. Actually I’ve already had one of these this year, although there’s a possibility I could revisit that one in future.

Writing phase

The writing phase usually begins well before the research phase has finished - one feeds back into the other. Putting thoughts into writing ends up generating more research questions.

As to the writing process itself, I don’t have much of a template. Each post is generally bespoke. The approach and format I end up pursuing, emerge in a bottom-up fashion as the research progresses. Every business is unique and context-specific and flexibility seems to be the most accommodating way to deal with that.

AI

I’ve touched on AI before. It will always be the NFTBC promise not to use LLMs in writing, except in a very limited fashion and always identified as such. Neither do I routinely use AI for automating data-type tasks - other than for occasional genuine chores, where there won’t be any ancillary benefits from carrying out the heavy lift myself. I do however now use AI in the research part of the process, in an iterative/dialectic way. I find it very helpful in helping to surface new questions. Insofar as the AI purports to give me the answers, I approach these with scepticism - always seeking to challenge and verify, including from original sources.

Walking

I’ve always walked a lot, out in the fresh air. Insofar as I have ever have any original insights (up for debate) they’re most likely to occur when I’m out walking rather than sitting at a desk.

My hope is that the net result of all of this is something a bit different, interesting and potentially interesting.

Thanks for Reading.

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Being an automaker is hard, really hard. Which is why there aren’t many financially successful automakers and why investors generally avoid the sector altogether. If you want to learn about what makes BMW different - please check out my free post here:

My purpose with these occasional BMW posts is to check in on the company’s progress as it undergoes a historical reinvention. If I’m right about BMW, then the company will soon enough resume its longer-term trajectory of growing volumes with a relatively steady cadence. This follows a near-decade long period of treading water:

So what happened in the last decade? In addition to global car sales peaking around 2017, two additional factors weighed on performance. These are: 1) Tesla stepping up from ~100,000 premium BEV units in 2017 to ~1.6m in 2025. And 2) a toughening of conditions in China since 2023 from increased local competition and slower business in the high-end segment. While BMW is now well ahead of other legacy carmakers in electrification, from ~2017-2022 they didn’t have a strong answer to Tesla. And from 2024, BMW’s outgoing BEV portfolio is showing its age against fast-moving Chinese competitors. Together, these two headwinds have depressed annual volumes by hundreds of thousands of units. Even still, BMW has done significantly better than its two closest peers:

The good news, as I have discussed elsewhere, is that BMW is a forward-thinking business and has spent some years reinventing its product portfolio for the future - if they get it right, the headwinds of recent years seem likely to fall away. Innovations include a Neue Klasse BEV-first architecture as well as suite of new technologies, new design language and important unit cost reductions. In addition to all-new Neue Klasse launches, over the next two years BMW is also carrying out unusually extensive mid-cycle refreshes that incorporate the new technologies - the result is a complete overhaul of the product portfolio in a very short period of time, 40 models in all. We have been told that some existing models (such as the 7 Series) will emerge as substantially new cars. Importantly, the Neue Klasse innovations apply across all drive variants, not just BEV.

Deliveries of the first Neue Klasse model, the new iX3, began in Europe about a week ago, while BMW unveiled the upcoming electric 3 Series (i3) just today:

The launch model will be the i3 50xDrive - much like the iX3 launch model with front and rear motors. The specs are impressive, including 560 mile (900km) WLTP range (BMW estimates 440 miles EPA range). If they follow the iX3 strategy, pricing will be no higher than the equivalent 3 Series ICE/PHEV models. This seems likely to be a highly competitive package - and that’s before BMW’s claimed differentiation on unique driving dynamics (see prototype test drive here). There are more model announcements coming up in the next few months, including the China-specific long wheelbase iX3, the new 7 Series, a new X5 as well as different i3/iX3 variants.

[NFTBC does not give advice - please do your own research. I currently own BMW shares].

Financials and Expectations

All told, we can expect a wave of news, journalist previews and such things throughout 2026 but we’re only in the early stages of deliveries and rollouts around the world. For this reason 2026 is too early to expect a positive financial impact - this is more likely a 2027 story.

2025

You can find BMW’s 2025 year-end materials here.

Briefly, 2025 was actually an unremarkable year financially speaking - stable group volumes, stable group margin and moderate increase in EPS. For the most part, BMW came within its outlook set at the start of 2025. But this masks a good deal of shifting beneath the surface:

Notably, performance remained strong outside of China. Automotive revenue of EUR 117.6bn was down 5.9% on FX and pricing (~1.7pp), while Automotive margin declined by 1pp to 5.3%. Excluding the effects of new 2025 tariffs as well as the non-cash BBA purchase price allocation, Automotive margin would have been 7.9% which is just below the strategic target of 8-10%. Along with tariffs, China and fluctuating effects from investment levels, there’s a lot of noise in BMW’s margins currently.

China

A year ago, BMW was hoping to be flat in China for 2025. In the end, the market continued to deteriorate in the first half, leading BMW to implement further pricing and product measures to stabilise sales. This was in addition to a thorough restructuring of the BMW China dealership network. Per BMW these various measures are starting to be more effective now and they have stabilised at around 50,000 units per month for all of 2025 - this has continued into the first two months of 2026. Additionally, per BMW, pricing has now stabilised since Q3 and even turned positive. Their current expectations are for flat sales and profitability in 2026, which would be a significant improvement on 2025 - and this is before Neue Klasse launches in China towards the end of the year. Things could, of course, get worse again - but for now the outlook is stabilising:

The German automakers certainly capture a good deal of attention currently regarding their recent performance in China. For their part, BMW have spoken about the prospect of increased local competition in China for a number of years, which I think dispels the sorts of claims you hear about the company being strategically blindsided:

The industry is facing a period of profound change. The BMW Group is not about to turn its back on its core business of building and selling premium cars and motorcycles, but the competition is getting tougher. New economic superpowers such as China and India offer opportunities and risks in equal measure. In the future, they will not only represent sales markets but at some point - probably not long from now - will also step up as providers of competitive products.

- The Next One Hundred (BMW’s 100th anniversary book, published in 2016)

When you look at the Chinese market, then the first thing you must recognize this is by far the largest car market in the world. And all along, it was clear, the largest car market in the world will be highly competitive, highly innovative and, of course, dominated by the largest local players. So what happened and is still happening in this market is not a surprise. It’s normalizing. So when you say normalizing, that means there is competition in a saturated market, like we have in Europe and in the United States.

- Oliver Zipse speaking at BMW’s Annual Conference, March 2026

What matters next, is what they do about it - and preparations actually began some years ago. It’s abundantly clear BMW is upping their game: “High local content, super innovative and highly competitive”. Chinese reviews for the iX3 prototype seem to be similarly positive to European/American ones so far - we’ll see how it goes.

2026 Outlook

BMW have left themselves a fair bit of wiggle room on guidance for this year, briefly:

• Group deliveries flat (in BMW-speak that could mean +/- a few percent)

• Automotive EBIT margin 4-6%

• Automotive free cash flow “more than” EUR 4.5bn

• Group EBT down ‘moderately’ (could mean ~10% in BMW-speak)

• Continuing buy backs (currently reducing share count by ~3% per year)

Notably, Automotive margin assumes a 125bps tariff headwind this year (vs 150bps in 2025 and 175bps annualised in H2 2025). BMW are working on the assumption of finalised/implemented EU-US and US-Canada-Mexico agreements by July, but the outlook also includes mitigations if these do not materialise. Note that the 125bps (if it happens), seems to imply a still lower annualised rate for 2027. The outlook apparently does not appear to include the possibility of a negotiated exemption from the EU-China BEV anti-subsidiary tariff of 20.7% that BMW currently faces on imports from China into Europe - recent reports suggest that such a negotiation is ongoing following a similar deal struck by VW. I would estimate this could be around a 30bps margin benefit if it comes through.

The other principal margin headwinds would include lapping some of the China measures from 2025 as well as increased depreciation and amortization from prior investments as new products come to market. Partially offsetting this is the ongoing ramp-down in R&D expenditure - in 2025 the R&D ratio was 6.2% as against a strategic corridor of 4-5% which BMW intends to return to by 2027.

One thing to keep an eye on is consumer behaviour surrounding the ongoing launches. It’s easy to envisage a scenario where purchasing is delayed due to the significant upgrade in capability coming from newer models. Partly as a result of product cycling, BMW is not projecting an increase in BEV share for this year (18%).

Longer-term outlook

As I’ve noted previously, 2026 is a year of transition at BMW. We should not take it therefore as a point from which to draw strong inferences about the future. I’m currently looking at BMW on a multi-year view to capture the future effects of all the efforts currently underway.

Frankly it’s pretty tough to model BMW with precision, but nevertheless I think we can make a solid case directionally - and that’s good enough given where the valuation is (7.5x consensus EPS on depressed margins, also see here). BMW confirmed this week that they intend to return to their strategic Automotive margin target of 8-10% within the ‘medium term’ - and for the reasons I’ve discussed previously I’m inclined to take this as a sort of North Star given its centrality in how they manage the business. While they haven’t given a specific timeframe, it’s a very fair bet they are planning around this internally. Four years, or year-end 2029, seems like a reasonable point to take as ‘medium term’.

So I think you can reasonably assume a trajectory something like this:

Naturally, the stronger the growth in volumes, the easier and faster it will be to normalise margin through operating leverage. Note that by 2029 the BBA purchase price allocation effect (dotted line) will drop out following completion of the allocation. With a margin normalisation, you don’t have to be especially aggressive on your revenue growth assumptions: 5% seems reasonable from a combination of volume/price/mix:

Am I being wildly optimistic? BMW have a soft target of 3m vehicles a year in 2030 which would imply something in the region of 5% annual volume growth 2026-2030.

Whether or not they do indeed achieve this remains to be seen. But one thing is emphatically clear - they do intend to grow and this is what they’ve been planning for.

Thanks for reading

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Welcome to The NFTBC Digest, an email received by full NFTBC subscribers only.

From week-to-week, there is all manner of news, links, marginalia and other curiosities concerning NFTBC stocks that I might not otherwise share with you. So this is what The NFTBC Digest is all about. My thinking here is that you can simply scroll to whichever company you’re interested in and see very quickly if there’s anything notable that tickles your fancy and that you haven’t already seen. There won’t be a set frequency - I don’t want to publish for the sake of publishing. Sometimes The Digest might be weekly when there’s plenty happening, but there could be fewer Digests during earnings season or if news is slower.

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Friends of NFTBC.

It’s been seven months since I last wrote anything about WPP. It feels like the right time for a new post. Seven months ago I wondered whether WPP’s new CEO, Cindy Rose, would continue with some version of the strategy in motion at the time, or whether she would pivot to something else. The answer has now landed, and I shall come to that shortly. The stock is, of course, more or less a write-off yet WPP remains a really interesting business to think about - positioned on one of the first stretches of beach to face the AI tidal wave. That’s the perception anyway.

Even before generative AI washed onto the scene, there were some serious doubts about the sustainability of the agency holding company model, for example:

• low switching costs: agencies constantly have to battle it out in competitive pitches to retain business

• time and materials model: agencies capture little of the upside, even when they create major client value

• pressure on client budgets: marketing came to be viewed more as a potential efficiency saving rather than a long-term growth investment. This drove expenditure to channels defined by ‘metrics’ that could be easily quantified, rather than the less quickly measurable outcomes and fat-tailed nature of creative brand and marketing campaigns. The result was ever greater share of spend captured by the digital ad platforms

Tight budgets, low switching costs and ever-greater workload for limited pay has meant generally anaemic growth and capped margins. Yet in 2026 the agency holding companies face two further existential questions:

• What does it mean for a time and materials industry when work takes less time and fewer people?

• Will professional marketing services even be required at all?

It should be fairly clear to most investors that we are still only in the foothills of whatever disruptive changes will be brought upon the world of business by generative AI. But we are already far enough in such that investors are beginning to ask questions about terminal values in those industries perceived to be losers - most notably, this includes software in 2026. But the marketing services industry was singled out as an obvious casualty even earlier on in the process. After all, what is the point of paying for professional marketing services in a world with Zuckerberg’s ‘black box’, Claude for Marketing, Veo and Pomelli.

Putting it all together, WPP’s highly distressed valuation implies that investors don’t hold out any hope at all. And even within this swirling tempest of uncertainties, WPP is perceived by investors to have adopted the absolute worst strategy and to be the most chronically mismanaged of the bunch:

On a comparable EV/Revenue multiple WPP is at ~0.45x, compared to ~1.1x for OMC and PUB.1 This effectively puts WPP in the same valuation territory as supermarkets, notwithstanding even-currently-depressed margins that are 3-4x higher. “Perhaps there’s a looming debt crisis to cause such distress?”, I hear you ask. Nope! WPP has no covenants on its debt and all maturities in the next 12 months are covered by cash already on hand. There has been a complete collapse in confidence as to WPP’s prospects of doing anything other than spiral into rapid and terminal decline.

But what if, rather than what I outlined above, things start evolving in a direction that looks even just a bit more like this?:

I think it’s an interesting question to entertain at least, even if it’s very hard to imagine right now.

What follows is some of my musings on the current state of affairs, reflections on what went wrong last year and thoughts about where things could go next.

[NFTBC does not give advice - please do your own research. I currently have a small holding in WPP shares].

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What Went Wrong

Last year, I outlined WPP’s strategy here. With hindsight I think I was perhaps around two years too early!2 Briefly, the company had undergone years of simplification in order to transition from the historic holdco model into one that is more integrated and future-facing. From around 2020/2021 they started to build their WPP Open software platform - an end-to-end AI-powered “operating system” for marketing. When ChatGPT launched in November 2022, WPP’s AI strategy was already somewhat defined and in motion - which is actually kind of impressive when you consider how many businesses still haven’t reached this stage in 2026. I won’t repeat a full description here (see the above link), except to say there’s not much else like WPP Open on the market in terms of completeness and capabilities (both internally derived and externally partnered). Already a year ago the system was rapidly maturing (see demo) and it’s now mature enough to offer as a unique self-serve SaaS end-to-end marketing platform. More recently they went live with AgentHub - a central library of verified/validated AI agents for use in internal and client workflows. WPP Open is one of two foundational layers to the business today. The problem is, I missed the other one…

I hadn’t yet fully appreciated just how incomplete WPP’s data strategy had become in the eye of clients - especially relative to Publicis which owns some of the largest identity assets in the world for the purposes of customer ID resolution and targeting. WPP, all of a sudden, found itself looking uncompetitive in a number of defensive pitches last year and lost important accounts to Publicis. The most important step towards closing this competitiveness gap was last May’s acquisition of InfoSum, which I wrote about in detail here. InfoSum (which WPP was already partnered with) is an innovative data collaboration platform, that allows partners to collaborate on their datasets without having to move their proprietary data anywhere or upload it into a third party environment - thereby overcoming previous barriers around trust and privacy. And by breaking down the trust/privacy barrier you can bring together disparate and essentially unlimited datasets, of which traditional ID might only be one part. WPP calls this approach federated learning.

In theory, this makes for a potentially much more context-rich array of signals than ID-first approaches. From these signals WPP and clients can makes new kinds of predictions: Instead of determining “this user is X”, you can ask “given the current context, what is the probability of conversion?” You can move from targeting known customers to predicting unknown audiences.

A month after the acquisition, WPP announced Open Intelligence, which integrates InfoSum into WPP Open to make it accessible to clients and embed it into the workflow. Such an approach is, as you would expect, only limited by the number of collaboration partners you have - so they made sure to pair the launch with a decent name drop at the time. The more data partners they have, the more valuable Open Intelligence becomes.

But the thing is, Open Intelligence didn’t exactly go live in June, there was a staggered rollout over the remainder of 2025. WPP lost the Coca-Cola US media account to Publicis in March 2025, months too early to be saved. The Mars media account went right at the beginning of June - again too late. Together these two accounted for perhaps $2.5bn in billings lost to Publicis.

Also at the end of May 2025, WPP announced yet another restructuring in its media organisation to transition it to a single operating model (“WPP Media”), entailing yet more layoffs and disruption. They admitted on their recent Q4 results call this caused some unquantified disruption to revenue performance last year, and that’s in a year where clients were generally cutting spend due to the uncertainty around tariffs and where pitching activity was down 10% year-on-year. In 2025 WPP’s like-for-like revenue declined by 5.4%, of which 150bps was net client losses and another 400bps in cuts from existing clients - ~11pp worse than PUB!

2025 was supposed to be a transition year - roughly flat margins and growth while they made some additional technology investments and cycled some remaining client losses from the prior year. In the end growth was almost 450bps behind initial guidance, and operating margin 200bps behind (operating deleverage and 100bps in severance costs):

The impact of gross client losses in 2026 (i.e. excluding impact from wins) is expected to be a 500-600bps headwind, so from a revenue perspective WPP will have its hands tied behind its back this year. But the more important question is: can they turn their win-rate around?

In the end, pitch performance started to turn around dramatically starting from August 2025 with the Mastercard media account, followed by Reckitt and Henkel in November and the UK Government and Jaguar Land Rover in December - among others. And this has continued into 2026 with SC Johnson and Norwegian Cruise Lines in January and Estée Lauder in February. Per JP Morgan estimates (cited by WPP), WPP had the strongest billings quarter among all of its peers in Q4 2025:

WPP say that Q4 2025 saw their strongest billings in five years. And just two months into the year the expected 2026 revenue impact from the current win pipeline already exceeds the total win-driven revenue impact seen in 2025. However, given the delayed revenue impact of all the wins and losses, H1 2026 looks like it’s going to be very ugly, with a recovery from H2 when the new business finally kicks in. The swing factor will be spend from existing clients and whether or not we see a recovery. I’ll come to guidance later.

Naturally, the next question becomes: is the recent winning streak a one-off or fluke?

Cindy’s Strategy: a single operating company

Putting on my hindsight hat once again, it now seems clear that what the previous CEO Mark Read was talking about a year ago was more of a strategic vision rather than a pitch-ready proposition. But to give him credit, he perhaps wasn’t too far off by the time he “retired” last Summer. To help demonstrate the point graphically, this is where he had got to at the time of the Capital Markets Day in early 2024:

Six months into the job, this is what Cindy Rose is presenting today:

As a reminder, Rose is a Microsoft alumnus (COO Global Enterprise Sales) who has been on the WPP board since 2019. I wondered last Summer whether she would pivot to more of Publicis-type strategy or continue some version of Read’s strategy. The answer is: a bit of both. What definitely remains is the WPP Open and federated learning foundation. I’ll talk here about what’s changed.

About a decade ago Publicis’ previous CEO announced a new strategy called The Power of One - a strategy that his successor Arthur Sadoun has pursued relentlessly and very successfully. The basic idea was to break down the traditional agency company silos and be able to offer clients more integrated and holistic solutions - all while hanging onto many of the individual agency brand names. Get it right and you can re-bundle3 creative and media, drive better client outcomes and win pitches more consistency. It’s worked fantastically well. Mark Read actually, in many respects, set off in a similar direction - OpenX is a successful example of this. But he never quite managed to land the strategy into a winning proposition that could consistently win in pitches - we discussed the data part earlier, but what else did he get wrong?

Rose believes she knows the answer:

Clients pointed to the fact that our complexity got in the way of true client obsession. We were siloed. We were hard to navigate. We haven’t been intentional enough about evolving our integrated proposition to adapt to the changing needs of our clients.

Now the good news from my perspective is that all of these issues are fixable. And as I said, we’ve already started to do so.

To build on our current momentum and make it sustainable, we need to radically simplify our organization really to unlock true client centricity. So to do that, WPP will no longer be a holding company. We will no longer be a shopping basket full of stand-alone businesses, hundreds of stand-alone businesses.

We’re going to move to a single company model. with 4 operating units across 4 regions with incentives that closely align to the overall performance of WPP. Being a single company with a simpler structure and common incentives are critical enablers of our strategy.

If WPP was only setting off on this simplification journey today, I think the business would most likely be in serious trouble. But, despite Rose’s dramatic terminology (“radically simplify”) the heavy lifting has already been done - we’re mostly talking about tweaks here. I think you can roughly split these fixes/tweaks into several overlapping flavours:

• Narrative

• Structural

• Incentives

At the most basic/obvious level it seems pretty clear that Rose just wants to tell the story better than her predecessor did - and she does seem to be better at this, I would argue (as is Arthur Sadoun). From listening to others, she seems to have been received reasonably well internally so far, in contrast to declining morale under Read. And I wouldn’t be surprised to see a similar spillover effect into client attitudes. And it’s clear that WPP is now increasingly going into pitches as a unified “WPP” rather than a collection of siloed agencies - story telling.

On structure, the main change to call out here is the creation of WPP Creative which unifies the various creative agencies into single regional P&Ls with more shared corporate function - all while maintaining the individual identities. Per WPP, the simplified corporate structure allows for new common incentives:

At the heart of WPP’s relationship with our largest clients are our global client leaders, our GCLs -- and our GCLs are already masters of creating value. But our existing operating model and our incentives and our internal processes have not always afforded them the agility needed to deliver seamless client-centric services that unlock new avenues for growth.

We’re transforming our approach. We’re going to empower our GCLs with the authority and the resources to function as true leaders for their client portfolios, exercising strategic leadership rather than merely orchestrating a bunch of activities. This is going to include greater control over client P&Ls and the authority to make the best strategic decisions supported by streamlined internal processes designed to eliminate organizational friction and provide access to the right resource at the right time.

We’re also establishing a new team of client solution architects. This team will apply deep industry expertise to develop winning growth strategies for clients and then architect tailored solutions to deliver on those strategies, unifying technology, media data, all of our marketing capabilities to really drive successful execution.

Now here’s the interesting part:

If you’re sitting in an operating unit, your incentives are 50% tied to your operating unit and 50% tied to WPP. If you’re in WPP as part of a corporate function, you’re 100% WPP. If you’re a GCL, you’re paid on your client growth. It’s that simple. And it’s dramatically different from where we are today, where if you’re in an agency, you’re paid on your agency results primarily.

So that is very, very different. And that’s why I think it’s going to unlock very different behavior, much different collaboration. In the past, our agencies competed with each other. That was the model. Today, when we go into a pitch, we cast the right resource for the right client at the right time and -- it enables that.

It enables a much more client-centric approach to the business. Just to add, we’re implementing that in 2026.

Client growth was a topic that came up a lot in WPP’s latest investor presentation - much more than in the past. And it’s an important point. Brands haven’t been growing as fast as they used to and you have to ask if part of the reason is the time-and-materials model that does away with upside capture. Upside capture kills two birds with one stone: 1) aligned incentives: WPP wins when the client wins and 2) it solves for the time-and-materials problem in the world of AI. In 2024 this was the vision, whereas in 2026 they’re pushing it as the reality. So here we come to the crux of it all: is WPP now in a strong enough position to be able to pitch client outcomes linked to outcomes-based pricing?

When WPP won the Jaguar Land Rover pitch in December, they won the whole lot: creative and media. Getting both accounts at once hasn’t been the norm in a long time (since the days of bundled creative and media), although Publicis has been making inroads with its Power of One strategy. Here’s what Johnny Horny said (who led the JLR pitch):

So starting with Open Intelligence to be able to build cohorts and understand audiences in a way that doesn’t require us to do simply old-fashioned ID matching, but to keep the data where it is, keep it safe and secure and then put that into a team that we’re going to build with JLR, where we and they are all together on the open platform end-to-end. And it’s the end-to-end integrated nature of this offer that I think then allows us to make what I think are becoming genuinely competitive offers when it comes to outcomes.

So those outcomes aren’t do you like the agency you work with, those outcomes are, are we selling more product? And will we get paid on being able to sell more product by being able to build their brands and measurably show that there’s greater levels of desire for their products and the crown jewels of brands that they’ve got. So we haven’t finished contracting, but those are the defining - and that pitch was against all the major holding companies - I think those are going to be the integrated propositions that will see us win JLR and hopefully many more JLRs pulling these ingredients together.

And CFO, Joanne Wilson :

Navigating through what is an incredibly and ever more complex ecosystem is incredibly challenging for CMOs. It’s getting tougher and tougher. And that’s what they’re paying us for. It’s no longer they’re paying for us to create 5 ads.

In fact, we can create 1,000 ads, but it’s how do you get those ads into the right audiences.

And that’s really what they’re paying for, which is really enabling this output-based pricing, it’s outcome-based pricing, and it’s also shifting more to tech fees and licensing fees as well. So this will be an evolution, but we’re making lots of progress in this area.

Part of the key to outcomes is “closing the loop” on measurement. And they cited Heineken as an example:

Consider our work with Heineken. They needed a way to connect their first-party consumer data with ITV’s on-demand viewing audience and Tesco shoppers.

Powered by InfoSum, Heineken was able to identify relevant audience segments based on age and real-time drinking preferences. Crucially, Tesco provided closed-loop measurement of sales impact, all without moving or sharing any customer data out of Heineken’s environment. In a world where measurable outcomes truly matter, the campaign success wasn’t measured in brand uplift or impressions, but in real sales data from Tesco stores, which increased by an impressive 189%.

If they can turn this into a repeatable process, then the prospect of an emerging moat might not seem so farfetched after all. But it remains, of course, too soon to tell and much will depend on execution.

Loose Ends / FAQs

Is WPP Open easily replicable? Could it be vibe coded?

I think there are two answers to this. The first one is yes - the bare bones of a marketing software tool with API links to model providers would be easy to get up and running. But it’s a lot more complicated than that. To start with there’s WPP’s proprietary IP which includes decades of brand and campaign data used to train proprietary models and inform proprietary agents (outside of the newly enlarged Omnicom it’s doubtful anyone has more of this). Then there’s WPP Media and Open Intelligence. A startup software effort on the creative and production side, for example, isn’t going to have any of the media and data infrastructure that are necessary for buying the right ad inventory - and that’s half the battle. Then there’s the challenge of getting to stable release with ongoing support and maintenance - WPP Open is now serving more than 70,000 regular users. There are barriers to entry.

Importantly, most of the putative WPP Open alternatives (including those emerging from the AI labs) are essentially point solutions and frequently tied to some kind of data or technology platform. Whereas WPP Open covers the entire marketing workflow (planning » creative » production » media + commerce) and it’s ‘open’ (you choose which data, third-party tools and models to use) - for the needs of your typical large brand-based business it’s arguably very differentiated.

Could InfoSum be vibe coded?

I think this could be more challenging given InfoSum’s higher complexity - moreover, a number of the innovations behind it are patented. But even then, anyone starting afresh would have to rebuild the network effects that come from onboarding increasing numbers of partners.

Existing client spend - is something broken?

As noted, existing clients cut spending with WPP in 2025 resulting in a 400bps headwind. Other than the WPP Media disruption, WPP attributes this to sudden cuts in discretionary project spend, especially beginning in Q2 at the time of the ‘Liberation Day’ tariff announcement. WPP has tended to have a disproportionate share of project spend in agencies such as AKQA. Qualitatively, peers such as Omnicom and Dentsu have reported similar trends in 2025. But one might be tempted to ask: did something change in 2025, e.g. are clients using AI for some work instead? I’m somewhat suspicious. I think we’ll have to wait and see.

Do we even need professional marketing services anymore?

The risk, perhaps, is that the trend towards viewing marketing as a discretionary expense to be squeezed (i.e. rather than a necessary growth investment) continues to snowball from here. This could push an increasing proportion of share either to Zuckerberg-style black boxes or to in-sourcing (“we’ll do it ourselves”). But it seems to me that black boxes are likely to be most relevant to small businesses merely looking to increase their surface area, in contrast to the more demanding complex nature of brand campaigns (Zuckerberg himself has essentially said as much himself). On in-sourcing, I kind of view this argument as related to the ongoing software debates. Many businesses already do some degree of marketing and software work in-house, and yet continue to outsource these functions in large part. Perhaps the main difference is that while software is near-term mission-critical, marketing is medium- to long-term mission critical. Ultimately we’ll have to see how this develops over time. My general feeling is that those brands that squeeze efficiency too hard, try to do too much themselves or surrender entirely to automation will seriously struggle - if anything, the incoming tidal wave of AI-generated content is going to make imaginative and innovative marketing campaigns more important than ever for those advertisers who wish to stand out in a sea of undifferentiated ‘AI slop’. For all the automation that WPP Open provides, it centres around keeping talented creative professionals very much inside and driving the process. But I fully expect this point to remain contentious for some time and readers will undoubtedly have their own views.

Where next? / thoughts on valuation

Given the distressed valuation, my working assumption remains that WPP is highly vulnerable to takeover - probably by private equity. But if they do manage to remain independent, the basic announced plan is this:

• 2026: Stabilise the business. LFL revenue growth to decline mid- to high-single digit in H1 and improve thereafter. Operating margin 12-13% (-100bps to flat)

• 2027: Return to positive LFL growth and start to rebuild margins

• 2028: Accelerate growth and margins

2026 is shaping up to be another rough year but, let’s face it, the bar is low at this stage. In order to work out reasonably well from here I think WPP merely needs to persuade investors of its right to exist. If they can continue to win client pitches and simply stop shrinking, I think that should be sufficient - and it could be on the cards for the second half of 2026. Quarterly comps get much easier in the second half of 2026, especially in the context of Q4 2025 which was the strongest billings quarter since 2020.

The last time WPP faced sentiment and performance somewhat comparable to today was in 2020 - weak project work and declining revenue masked strong net billings that took a couple of quarters to start showing up. From Summer 2020 the shares surged by 100% to the end of 2021.

There are other considerations too. First, for 11 out of 12 months in 2025 there were four major holding companies until Interpublic was engulfed by Omnicom in November. Not only will there be significantly reduced competition in pitches, but it’s hard to imagine Omnicom being able to fight its best game during a year of heavy integration work. Second, perhaps the big swing factor for 2026 will be existing client activity. Given guidance (gross losses 500-600bps and >250bps of gross wins already baked in), we can start to think about scenarios:

Consensus is currently sitting nearer to the bear case - but the range of possible outcomes is actually kind of wide. For a stock trading at 5x consensus 2026 EPS, it’s intriguing. If something like the bear case does indeed prove to be the terminal state, then the shares might be fairly valued after all - or maybe even too high. But if it’s something more like the bull case and we exit 2026 on a healthy trajectory, I would expect a rapid normalisation to an Omnicom-like valuation or about +90% (~8x P/E on potentially stable earnings). To be clear, I think WPP is very hard to value currently, given the range of outcomes. Personally, I’m hopeful that WPP will re-establish its right to survive but I couldn’t yet tell you what a steady state might look like. If things did go well there’s no reason in principle why a path to Publicis-like performance (18% margins and consistent MSD growth) shouldn’t be the aspiration - over time. My inclination for now is to view WPP more like an option - a cheap option.

Other things to look out for in 2026:

• They more or less confirmed they’ll be doing some divestments this year. For me, the lead candidate seems to be Burson, their public relations business, which I see as peripheral to the strategy. If they can get just 1x revenue for it, that would be around 25% of the market cap and 7% of net revenue. Even after some degree of net debt reduction, there could be scope for a significant buyback that more than offsets the divested earnings.

• Rose made clear that she want to keeps the narrative going with investors throughout the year: there will be three webinars on each of WPP Media, Production and Enterprise.

That’s it. Thanks for reading!

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When I sent my PRCT post last month, my intention had been to publish it with ample time for you to read it before the 2025 results as well the previously announced Investor Day - both took place this week. I was particularly interested in the Investor Day where new CEO Larry Wood was to outline his strategy. I highlighted the possibility of jitters:

Perhaps the bigger concerns in 2026 are 1) the possibility of a growth slowdown while Larry puts into effect his strategy adjustment and 2) impact from increased investments. Larry has already hinted at the possibility of both. While it’s possible that such things are already priced in, headwinds do not seem to be well-tolerated in the current stock market environment even when underpinned by a sound strategy. Something to watch out for then as a dislocation may create buying opportunities for investors with longer time horizons.

And jitters is exactly what we got. At one stage on Thursday the shares were down more than 25%. Stock price violence of this magnitude used to be quite rare, but we’re all used to these sorts of things now - welcome to the Beauty Contest.

I promised you an update following the Investor Day, and that’s the purpose of this post. This will be slightly longer than a typical earnings update, given its nature as a validation event following the deep dive. But with around three hours of conference call this week, two press releases, a 100 page slide deck and a 10K, I’m not going to cover every detail here. My intention is to focus on: 1) those areas where PRCT is doing what they said they would (execution), 2) those areas where they’ve departed from my previous expectations and 3) what all this could mean for the future. When it comes to PRCT’s future, I think there are really two issues of standout concern:

1. Sustainability of growth

2. Operating leverage

We’ll talk about both here. Consensus numbers remain pretty cautious on both counts, and not unreasonably so. Hypergrowth always fades eventually, while PRCT has shown relatively slow progress on operating leverage so far. Even fast growing companies have to demonstrate that they can make money in the end - what’s the point otherwise? But Larry is proposing to run the company in a different way than in the past - if he gets it right then there’s no particular reason why we shouldn’t see growth remain at a relatively high level for while and see margins shoot up faster than expected. The proof will be in the pudding, as they say.

You can find the 2025 earnings release here and the Investor Day press release and slide deck here and here.

Let’s get going.

[NFTBC does not give advice - please do your own research. I currently own shares in PRCT].

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Welcome to The NFTBC Digest, an email received by full NFTBC subscribers only.

From week-to-week, there is all manner of news, links, marginalia and other curiosities concerning NFTBC stocks that I might not otherwise share with you. So this is what The NFTBC Digest is all about. My thinking here is that you can simply scroll to whichever company you’re interested in and see very quickly if there’s anything notable that tickles your fancy and that you haven’t already seen. There won’t be a set frequency - I don’t want to publish for the sake of publishing. Sometimes The Digest might be weekly when there’s plenty happening, but there could be fewer Digests during earnings season or if news is slower.

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When I started writing to you about BRKR 10 months ago, the company was entering a period of profound policy-induced uncertainty - specifically around government-sponsored scientific research in the US as well as a looming trade war. I left open the possibility that BRKR could face some major, albeit temporary, headwinds. In the event, the headwinds proved to be worse than I had feared, but fortunately more acute rather than chronic in nature.

Following some self-help and hard work, BRKR was heading in the right direction again in the latter part of 2025 and by year-end it felt like the stock might be starting to reach escape velocity, even if it was not yet close to being fully valued. But following yesterday’s results and a wobbly beginning to 2026 for markets in general, we’re now right back where we started 10 months ago:

The good news is that we can now see the light at the end of the tunnel. This year BRKR will grow EPS higher than 20% in constant currency, and we should probably expect something similar for 2027 too - and even beyond. As noted in my year-end review, BRKR is massively under-earning on margins and the upwards climb is just getting going. You can check out my various BRKR posts here (paywall with previews).

Time to talk about yesterday’s earnings.

[NFTBC does not give advice - please do your own research. I currently own shares in BRKR]

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Welcome to The NFTBC Digest, an email received by full NFTBC subscribers only.

From week-to-week, there is all manner of news, links, marginalia and other curiosities concerning NFTBC stocks that I might not otherwise share with you. So this is what The NFTBC Digest is all about. My thinking here is that you can simply scroll to whichever company you’re interested in and see very quickly if there’s anything notable that tickles your fancy and that you haven’t already seen. There won’t be a set frequency - I don’t want to publish for the sake of publishing. Sometimes The Digest might be weekly when there’s plenty happening, but there could be fewer Digests during earnings season or if news is slower.

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It has been a particularly dramatic couple of weeks for software stocks since I wrote to you with my musings about PTC and AI. As I wrote at the time, with the rise of generative AI it’s clear that some species of software could be more at risk than others. No doubt the debates among investors will continue to rage on for quite some time. I have made the case that in the near- to medium-term AI is more complementary to PTC’s business model rather than threat. And then for the medium- to longer-term, PTC starts from a position of strength: “I would argue AI is their game to lose even if success is yet to be secured”.

Since the software-AI drama began this year, it feels as though PTC could be receiving some benefit of the doubt. But we’ll have to see how this evolves over time.

There will be further things to say on this topic in the months ahead, but this post will be more directly about the progress in PTC’s ongoing go-to-market transformation and the prospect of a durable business re-acceleration in the near future. PTC reported earnings this week and there are a few points worth noting for those of you with an interest in the stock. For those who are new to the story, feel free to check out my previous PTC posts here (behind paywall, but with previews).

[NFTBC does not give advice - please do your own research. I currently own shares in PTC]

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It has been exactly one year since I launched the blog with the REGN deep dive. I thought I would mark the occasion by offering a few reflections on the original post. I have also taken the paywall off for February, so have a read of the REGN deep dive if you haven’t yet and would like to. After that, I shall go into some 2025/2026 commentary for full NFTBC subscribers.

Deep Dive Reflections

The thought occurred to me recently that it might be interesting to do an updated version at some stage. But reading through it again last weekend for the first time in a while, I don’t think that time has arrived yet - most of it I would probably leave as it is. I still believe REGN to be a very special business, and the reasons for that, as outlined, haven’t changed.

In early 2025 I was cautious about the outlook for Eylea but offered no particular predictions for its path that year - naturally, I had little idea that we’d be here one year later with the 8mg pre-filled syringe still yet to be approved in the US. The good news is that approval is finally coming into view - April, we are told. Neither did I forecast 2025’s other negative surprise - the mixed Phase III for itepekimab. But, again, neither did I make much of itepekimab in the deep dive, as it didn’t feel to me like a major driver of the company’s long-term value. Maybe I’ll change my mind about that in future, but I would also note that REGN only has 50% of the economics anyway.

One thing that’s clear is that these events took us on a wild ride with massive swings in analyst expectations for near-term EPS. In the deep dive I noted consensus 2025 EPS of $44.43. In the end EPS came in at $44.45 (adding back the $0.14 non-cash charge from acquired IPR&D - an adjustment that REGN does not itself make but many would). One might even say 2025 was a whole lot of fuss over nothing.

Let’s now talk about some of my more significant reflections, such as they relate to the REGN of the future - specifically where I have changed my mind somewhat or where I might have done things differently. Starting with my 2035 illustration, here’s what I wrote:

Dream with me for a moment. Let’s imagine the year is 2035 and this is what REGN’s business looks like. It should go without saying that this is not a forecast, so please don’t take it as one - it’s an illustration. Note there’s no Eylea revenue in there, no Dupixent, no additional siRNAs from the Alnylam partnership. I’m leaving a lot out - stuff that most likely shouldn’t be left out and some of which could be sizeable. I’m just following a select few areas that REGN are signalling about and really going after to show that it doesn’t take too much imagination at all to see REGN as a $35bn business in 10 years:

Let’s not quibble over the $35bn. One thing we know for sure is that it’s wrong. I actually suspect it will be higher, although I also note that consensus estimates (the ones that even go that far) put 2035 nearer $19bn. Only time will tell. I think it’s more interesting to ponder some of the ways in which things have developed in the last year. To reiterate, I don’t consider myself an expert in any of these matters, I merely take my cues from what REGN tells us and hints at - as to why that’s an appropriate strategy, I hope I successfully conveyed that in the deep dive.

Areas where I was too enthusiastic, perhaps.

I think the main one here, for me, is the CD28 costimulatory bispecific antibodies. At one stage it seemed as if REGN was going to have a steady flow of these into the pipeline as part of a ‘plug-and-play’ combinatorial approach with CD3 bispecifics and Libtayo - to ‘extend’ and ‘enhance’ the efficacy of immuno-oncology approaches. Their enthusiasm was high and that drove mine as well. For a while the prostate cancer data (PSMA) looked like it could be game-changing for the field. But here’s how Israel Lowy (who’s in charge of developing these assets) put it in November:

One thing that we have is we have a whole co-stimulatory bispecific panel of agents where we’ve been the pioneer. It’s been -- it’s conceptually really elegant -- and we’ve seen different types of efficacy in different settings. In the prostate cancer field, we saw really promising efficacy, but some problematic immune-related adverse events. We are continuing to move forward in that area, looking at combinations with PSMAxCD28, that can widen that therapeutic window and allow us to actually continue to deliver some of the striking responses we’ve had. We have a MUC16xCD28. We have an EGFRxCD28. Those so far have been relatively modest in terms of delivering clear-cut benefit, which I think speaks more to the lack of understanding we have about how to optimally develop this area. But we are pushing forward. And as I said at the beginning, we do this with the idea of having conceptually appealing combinations.

While work clearly continues, the degree to which the CD28s come up now in investors discussions is sharply reduced - something that really stood out to me in 2025. But whether that’s due to reduced expectations internally at REGN, or because of the emerging volume of other interesting things to talk about is unclear (perhaps both).

Areas where I wasn’t dreaming big enough

As 2025 progressed, it’s clear I wasn’t dreaming nearly big enough regarding Lynozyfic (BCMAxCD3 bispecific) for the treatment of multiple myeloma and precursor conditions. It’s now abundantly clear that REGN have huge ambitions here backed up by an array of pivotal trials reading out from 2027 onwards. I won’t re-cover ground I have visited in prior posts, but I recommend the recent Lynozyfic roundtable event if you want to get up to speed on this one. In my mind I had pegged Lynozyfic as perhaps a low-single digit billion peak year sales asset, but it very much feels like REGN has different ideas. I’m getting a similar impression regarding Ordspono as well (CD20xCD3).

So where does that put the $20bn oncology revenue in 2035? Appropriate or wildly ambitious? If I was writing the illustration again today, perhaps I would dial the $20bn down a bit. Again, only time will tell.

Similarly, as 2025 progressed it became increasingly clear that REGN has exceptionally bold ambitions with the FXI anti-coagulant program, as evidenced by another array of pivotal trials enrolling over 30,000 patients in total - it’s a massive investment. These start reading out from 2027 onwards. The scale of it all is starting to suggest that my $5bn figure could be too stingy. You can listen to the recent FXI roundtable for more.

For the avoidance of any doubt here, these are, of course, unproven assets until they have sufficiently succeeded in their various pivotal trials and demonstrated commercial relevance. I would just draw your attention to REGN’s track record in phase III trials relative to currently very modest expectations (e.g. sub-$1bn peak year sales estimates for Lynozyfic).

Areas where, perhaps, I was appropriately enthusiastic

Regeneron’s C5 program (cemdisiran +/- pozelimab) in complement-mediated diseases was amazingly under-followed this time last year, but I felt we had enough signal from REGN, along with later stage progress, to add it as a material contributor in the 2035 illustration. In the end, the phase III results in August 2025 in gMG were particularly impressive and differentiated. There are further readouts coming up this year and next in geographic atrophy and PNH - it’s clear that REGN has big ambitions for another ‘pipeline-in-a-molecule’ type opportunity here and for the time being I feel like my initial enthusiasm was warranted.

I think it’s increasingly clear that REGN intends to have a meaningful obesity business. While last year I went out on a limb somewhat by including obesity in the 2035 illustration (again, merely following management’s direction), a lot has happened since. This includes proof of concept data in muscle preservation strategies, the in-licensing of a promising late-stage GLP-1/GIP agonist and recently announced plans to start studying the latter formulated with Praluent in the same auto-injector (i.e. weight loss and lower cholesterol in one treatment). Insofar as REGN is coming to the table with obesity treatments, the goal is to do something differentiated - to offer some kind of benefit that the other approaches do not rather than to compete on narrow weight loss metrics. I think it’s clear we should expect further developments from here.

Other comments

Another unanticipated (and under-discussed) development last year was the return of focus to REGN’s cat and birch allergy programs, which produced excellent phase III results. Len included both of these in a list of potential blockbusters. Both are going into confirmatory phase III trials with data anticipated in 2027. Were I to produce a new version of the 2035 illustration I would include these as incremental contributors.

Perhaps more importantly, it’s worth noting that the exclusion of Eylea and Dupixent from the 2035 illustration is highly unrealistic. I now believe this to be the case even more so than last year - particularly with regard to Dupixent. Around mid-2025 it started to become clear that REGN had some kind of follow-up brewing for Dupixent (or Dupi 2.0 as I called it). We now know, that REGN has a whole suite of approaches for extending dosing intervals and potentially even improving on the efficacy. These include (among others) an accelerated development program for an IL-13 mAb, and even a ‘Supi-Dupi’ (as they put it) - a naturally selected successor molecule that is potentially even better. I hadn’t foreseen any of this a year ago.

Something else I’d do differently

On reflection, I don’t think I made quite enough of the Regeneron-Alnylam partnership in the deep dive. As the months ticked by in 2025, the depth of the partnership became increasingly hard to ignore with a stream of shared assets entering the clinic. I follow Alnylam pretty closely too so I knew this was coming, but most of these programs are still years away from any potential approvals (other than cemdisiran), and therefore perhaps relatively meaningless to most investors. I think this will change as we start to approach the end of the decade - just something to keep in back of mind. Here’s REGN’s pipeline that I showed you one year ago:

REGN doubled its number of Alnylam-partnered siRNAs in 2025 from 6 to 12. There will likely be more coming in 2026 too.

After Alnylam and Arrowhead, I think REGN is probably the third biggest siRNA player in the world at this stage. And with siRNAs almost at 50% of the phase I pipeline, you’d think they will eventually become a material part of the late-stage pipeline too. Naturally, phase I assets tend to have a high attrition rate on average, just bear this in mind however: one of the few biopharmas with a comparable hit rate to REGN is Alnylam. As far as phase I assets go, I suspect we could see an unusually high percentage of these make it all the way.

Thanks for reading. Time to have a look at the recent earnings and talk about the outlook.

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I must say I never envisaged writing to you on the topic of benign prostatic hyperplasia (i.e. enlarged prostates), yet this is precisely where I find myself today. Investing frequently leads in unexpected directions which is, of course, part of the fun.

We are going to talk about Procept Biorobotics (PRCT), the developer of an innovative automated surgical system for treating BPH. PRCT believes that this system is sufficiently disruptive to become a new ‘gold standard’ in BPH treatment. Currently, the vast majority of those tens of millions of men around the world seeking help for BPH are directed to pharmaceuticals - imperfect ones. With surgical procedures currently only a very small proportion of the overall treatment landscape, there’s potentially a sizeable business to be had if just a little share can be taken from pharmaceuticals - that’s PRCT’s longer-term strategy in a nutshell.

Technically PRCT’s system is a robot and, yes, one that uses AI. The business has been on a trajectory of rapid growth, with revenue for 2025 due to come in around 9.5 times higher than at the time of IPO in 2021. Rapid growth, robots, AI - you’d think these conditions would be ripe for investor enthusiasm. And you’d be right. Following a successful follow-on share issue in late 2024, PRCT investors could scarcely be more excited until just over a year ago. But over the course of 2025 PRCT stock quickly reversed to such an extent where anyone making the bull case risks looking silly.

Despite PRCT’s growth, there are various uncertainties at play. Just to help set the scene, the basic ones include:

• PRCT is losing money - when will it stop?

• How profitable might the company be and when?

• The hyper growth is tapering - what might be a more sustainable rate?

• How big is the TAM anyway / is PRCT unrealistic in its stated ambitions?

There had been some signs that PRCT might start to more or less breakeven at the end of 2025, but the company now has a new CEO who has signalled even higher investment levels in the months ahead.

I think it’s an interesting time to be learning about this business - and I mean specifically between now and the end of February. The new CEO, Larry Wood, is the reason I starting looking at PRCT, having followed him over from his previous long-term role at Edwards Lifesciences. At Edwards Larry grew their pioneering TAVR technology into a multi-billion dollar business - progressively building it into a new gold standard in the treatment of aortic stenosis. While very different medical domains, he sees certain parallels with what PRCT is trying to do, having also sat on PRCT’s board for a year before signing on as CEO. It was enough to get me listening anyway. In late February Larry will host an investor day where he will give multi-year revenue guidance and profitability targets. We’ll also get some more information about his sales and marketing strategy as well as updates on clinical data and strategy. I have no detailed predictions for you on how he’s going to set his longer-term targets, except to say that they are likely to be ambitious. So whatever ambitions he spells out next month, I think we should entertain them at the very least.

With that, it’s worth recapping some of the dynamics I like to look for in stocks, here at NFTBC:

• Businesses that are trying something differentiated - something worthwhile that is not yet perceived as valuable

• Credible and capable leadership who can make it happen

• The presence of uncertainty (which investors tend to avoid)

• The necessity of patience to let the situation work itself out

• Optionality

PRCT seems to fit the bill here. We have: 1) a business that is trying to disrupt current practices in BPH treatment and grow the market in the process; 2) a CEO who has very successfully done something similar before albeit in a different medical domain; 3) doubts about whether it will actually happen or to what extent and when and 4) potentially a very large and long runway depending how well they execute and a strategy to expand into a sizeable adjacency. All in all it could be an interesting multi-year story - and so these are the reasons I’m keen to write about it. The basic plan is to explore these four issues - to kick the tires, as they say. I aim to leave any possible hype to one side and to try to take a sober look at things. I think this is one of those situations where reasonable-sounding arguments can be made by both the bulls and the bears - we’ll look at some of both. That said, I am leaning bullish and have taken a small position.

Before we get going, some of you will no doubt already be wondering what PRCT might be worth. This does, of course, depend on the variables highlighted above. We will get into that later and I will share some of my ideas. The good news is that management certainly do intend to make the business profitable in the not-so-distant future, and I think Larry Wood is likely to confirm this next month. But not yet having any earnings to speak of, I can’t show you any earnings-based multiples. So let’s look at EV/sales:

I have included Intuitive Surgical (ISRG) here simply as the largest, most obvious and most successful robotic surgery comparator.1 I have also included Boston Scientific (BSX) as a second comparator. I suspect that PRCT might be acquired before we get a chance to see the story play out - BSX is perhaps the most logical acquirer as a large medtech that operates in the same general space as PRCT. In 2026 PRCT is expected to grow about twice as fast as ISRG and three times as fast as BSX - just to give you a relative sense of where things are.

This post won’t be quite as long as typical NFTBC deep dives, although I anticipate there being more to say in future - including next month. Consider this an exploratory or thinking-out-loud exercise, as part of a longer journey. I will undoubtedly get things wrong, and will endeavour to clear up such issues over time. With that, let’s get going.

[NFTBC does not give advice - please do your own research. I currently own shares in PRCT].

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Welcome to The NFTBC Digest, an email received by full NFTBC subscribers only.

From week-to-week, there is all manner of news, links, marginalia and other curiosities concerning NFTBC stocks that I might not otherwise share with you. So this is what The NFTBC Digest is all about. My thinking here is that you can simply scroll to whichever company you’re interested in and see very quickly if there’s anything notable that tickles your fancy and that you haven’t already seen. There won’t be a set frequency - I don’t want to publish for the sake of publishing. Sometimes The Digest might be weekly when there’s plenty happening, but there could be fewer Digests during earnings season or if news is slower.

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Friends of NFTBC.

This year, it seems, investors have collectively asked whether enterprise software is being rendered obsolete by new generative AI tools. It’s not a topic I’m keen to weigh in on or where I would have much of use to contribute - generally speaking. That said, there is currently one software stock that we talk about here at NFTBC - PTC. So let’s talk about it.

At present, there are two principal threats that software businesses are facing (as widely perceived). The first is from generative coding tools (“vibe coding”) - specifically, if software can now be written by anyone at low cost, why would businesses need to buy expensive enterprise applications anymore? The second is risk of displacement by “AI agents” - if an increasing proportion of traditional business functions can be carried out more efficiently by autonomous agents, won’t businesses require fewer software seats?

Notably, PTC stock doesn’t appear to be dropping as hard as many of the previously popular SaaS names. It seems abundantly clear that some species of software could be more at-risk than others and, I suspect, investors are in the process of trying to sniff out which ones these are - and rightly so. The questions involved are difficult ones to wrestle with and I wouldn’t be surprised if we’re still a good while away from greater clarity - possibly years in some cases. Equally, it seems to me that some software businesses are likely to prove quite robust or potentially emerge as beneficiaries in the wave of developments to come. I’m inclined to include PTC in this latter camp.

2026 should be an illuminating year for PTC followers as we get to hear progressively more about the AI strategy that is already well underway. The cadence of AI feature releases has been steady over the last 12+ months, with Codebeamer AI launching just last week (demo here).

I listened to a conversation with PTC’s AI Product Lead Ayora Berry in recent days, and so I thought I would share a few thoughts with those of you who follow the story. Berry was talking to one of the co-founders of Leo AI - an engineering design co-pilot that has officially partnered with PTC’s cloud CAD Onshape product. The title of this post (“Organising the Noise”) derives from the conversation. It’s certainly a bewildering time, and this makes it all the more important to present customers with a coherent strategy and roadmap - and PTC has been doing exactly that. In broad brush strokes this has entailed conveying to customers what to expect and on which approximate timeframes. Rather than overpromising and under-delivering, PTC is releasing AI tools into its existing products, as and when they are sufficiently robust and genuinely useful. As you might expect, this means simpler deliverables today, and more complex and challenging ones in the months and years to come. Simply being organised and dependable at a time like this, perhaps should not be under-estimated.

[NFTBC does not give advice - please do your own research. I currently own shares in PTC].

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Just to kick things off, I don’t think there is any serious suggestion that businesses would ever seek to vibe code replacements for their CAD or PLM systems - you quickly get into a minefield of all sorts of different issues around complexity, compatibility, robustness etc. The idea is barely worth entertaining. Recall in the deep dive we looked at a long list of case studies where companies suffered negative consequences from switching CAD/PLM systems (or even versions). So rather than system replacement, the possibility of threats relates more to workflows - how users interact with the existing underlying systems and who captures the economics. For example, on the vibe side of things, there’s “prompt-to-CAD” or “vibe CADing” - where you use a (potentially third-party) interface to describe a part which is then executed by a CAD system.1 Then on the agent side, the threat is that a third party comes along and controls a new surface for interacting with the agents, while the PLM system is effectively relegated to an invisible layer and disappears from the user’s mind.

I have highlighted these risks for understanding and completeness. But it must be said that in the near- to medium-term AI looks to be highly complementary to PTC’s business and more opportunity than threat. For the medium- to longer-term PTC is starting from a particularly favourable position - I would argue AI is their game to lose even if success is yet to be secured. Let’s now start thinking about some of Ayora Berry’s recent comments (lightly edited):

it’s very clear for us: [the key to driving AI adoption is] to get your product data foundation in order, or your data house in order. In the enterprise or in any software system, AI is only as good as, the context from which it operates in. And so your data in your systems need to be quality, they need to be accessible, they need to be structured so that the AI has that substrate from which to deliver insights and automation. So in terms of being ready for AI, the clear message is that there’s good news: like you already have a good start. You’re using PDM, PLM, you’re using ALM—all these systems of records out there to manage your business processes. And you’ve been on those journeys for decades. Now you can tap into all that work you’ve been doing by embedding AI into those systems to deliver those insights and automation. So that’s foundational: is to get that product data established and continue your journey in using enterprise software.

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Both Bruker and Regeneron presented yesterday at JPM. I have combined some thoughts and notes into the same post. These are, of course, very different businesses except perhaps for their commitment to leading-edge science which serves as something of a commonality - that and unorthodox owner-operators at the helm. The plan here is to highlight anything I think is new or interesting, or where there’s an increase in the signal strength.

You can usually rely on Regeneron to come out with something at least a little unconventional at JPM. This year it was a slide, having a bit of a dig at industry practice:

As to the perennial question of whether or not Regeneron will finally do a major deal with its big cash pile, I suspect we have our answer. With that, let’s get going.

Bruker

BRKR put out an 8K yesterday and a slide deck.

Financials / outlook

• Preliminary Q4 25 revenue USD 965m - 970m, implying full-year revenue USD 3.43bn +2% (flat in constant currency). This is marginally above consensus

• Book-to-book still >1x

• FY26 outlook (guidance in February): Flat to LSD organic revenue growth + 250-300bps operating margin expansion

And then very strong commitment beyond just ‘26 and taking a big step and a big swing in ‘26. For ‘27 through ‘30 really to deliver continued major margin expansion that may be 150 or 200 bps per year each year, hopefully, and double-digit non-GAAP EPS CAGR, while presumably by ‘27 returning to what we think our portfolio and should enable us to do, which is to deliver meaningfully above market revenue, organic revenue CAGR.

Thinking through the implications, Frank seems to be suggesting 900-1000bps margin expansion by 2030, which is roughly where I was thinking, if a bit ahead. He stopped short of providing a concrete target but suggested there would be an Investor Day later in the year.

A few early indicators on the 2026 outlook:

• Not expecting a “snapback to our traditional growth rates right away”

• “We had said we would aim for $100 million to $120 million of cost reductions, both COGS and OpEx, and we are very much we are very much focused on the high end of that. So we’re aiming to deliver $120 million of anticipated cost savings in 2026”

• New BEST agreements: “that’s a big deal and removes a drag or a headwind to growth that was meaningful last year and that should reverse in ‘26 and beyond as well”

• “we do have some early signs for sure on the mix side of the business that we will do better from a gross margin perspective in a number of our businesses”

Project Accelerate 3.0

It’s been a few years since they’ve added a new iteration of Project Accelerate, which Frank says is now at 60% of the business. It’s clear they’ve been heading in this direction anyway, but perhaps the drive for recurring revenue has now stepped up a gear:

Sometimes at Bruker, we say we work too hard for all the revenue. We have to deliver so much innovation, and that’s great. But last year, people weren’t quite as willing to work or to pay for innovation, for research instruments and ACA/GOV. So we’re very deliberately emphasizing more sticky, more aftermarket, more consumables business, more service businesses.

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Welcome to The NFTBC Digest, an email received by full NFTBC subscribers only.

From week-to-week, there is all manner of news, links, marginalia and other curiosities concerning NFTBC stocks that I might not otherwise share with you. So this is what The NFTBC Digest is all about. My thinking here is that you can simply scroll to whichever company you’re interested in and see very quickly if there’s anything notable that tickles your fancy and that you haven’t already seen. There won’t be a set frequency - I don’t want to publish for the sake of publishing. Sometimes The Digest might be weekly when there’s plenty happening, but there could be fewer Digests during earnings season or if news is slower.

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Friends of NFTBC.

A very happy new year to all and wishing you the best for 2026! To mark Notes From The Beauty Contest approaching its first year, and to bring in 2026, you can get 20% off the usual NFTBC annual subscription during the month of January.

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In this review, the plan is to provide a rundown of the various stocks I wrote about in 2025. We’ll briefly cover what has happened so far, take a quick look at the thesis and then go over a few thoughts for 2026. In the second part of the review, full NFTBC subscribers can see my current portfolio weightings of these names as well as my 10-year track record from looking at stocks in this particular way.

Before we get to that I thought it might be interesting to begin with a discussion of NFTBC itself - some of the learnings so far and thoughts about future direction. In early 2025 I found myself suddenly out of work, having previously been an analyst with a global large cap fund for many years. Perhaps a story for another time. But rather than looking for another job, I decided to start Notes From the Beauty Contest, named after Keynes’ analogy of the newspaper beauty contest - which I took to be the central dynamic at play in equity markets at that time. You can read what I wrote here, but the basic point is captured in these words:

It matters not what a company’s prospects offer for the years ahead, but instead what investors think that other investors think are the key datapoints and considerations from one quarter to the next.

It becomes easier to explain (if not fully comprehend) the increasingly wild volatility around earnings and other events once you consider the third and fourth orders of second-guessing. This beauty contest dynamic seems equally true today as it was a year ago.

One option, of course, is to throw yourself headfirst into the game. Some investors appear to be particularly adept at it, although I suspect perhaps not all that many. Another, is the approach ultimately adopted by Keynes himself - one of fidelity to a relatively small number of well-understood stocks (his ‘pets’) as a practical means of dealing with uncertainty. I find myself temperamentally suited to some version of the same. Where a business is doing something compelling and differentiated, and run by capable people, things frequently turn out better than expected (or not as bad as feared). I like to hang onto these sorts of names and let them work themselves out rather than trade them a lot. But I don’t shy away from changing the position size as things evolve - sometimes quite aggressively. If the risk/reward looks strong I like to own more, and vice versa. It’s also worth remembering that uncertainty applies to the upside just as much as the downside. I’m quite comfortable living with the uncertainty of not really knowing how things are going to work out. Conversely, for many, uncertainty seems to be the investment equivalent of Kryptonite - low visibility in the near-term is often not well tolerated. Tolerance for the uncertain combined with patience are two of my favoured tools therefore - and I have aimed to instil these into my research at NFTBC. But when stepping into the uncertain, it certainly pays to be in the hands of the right company management. Here is what I have written previously:

If investing is inherently uncertain, who is better placed to know what lies ahead than those most involved. So I believe that if you can find competent and credible management teams, you should take them seriously - especially when others do not.

The approach has worked relatively well for me over time, and we’ll get into some of that later on. I’m no preacher however - there are many ways in which to invest. This is merely what I do and I can only hope that others might be interested.

NFTBC started as an experiment. I didn’t know what to expect or if anyone would be interested. The success of some posts really surprised me - I had no idea that so many people would be curious about Regeneron, for example. Same goes for Bruker. I think those two, along with the recent Merck KGaA post, hopefully represent the best of NFTBC, so far. With the long BMW and PTC multi-part series, I think I went a bit off-piste and self-indulgent. While I enjoyed writing both, I think the appetite for that depth of research is more limited - particularly in a deeply unfashionable sector such as automakers. In both cases I think the first part was probably sufficient for most NFTBC readers. My main regret is the WPP post - or at least putting it out as my second post and in the way I did. The basic intention was to make a bold call, and to be right about it quickly in an ill-conceived attempt to gain some attention early on when I had very few readers (the WPP email had only 15 recipients) - that call proved to be hopelessly wrong. Moreover, making bold calls in quite this way has never been my modus operandi. I think it’s worth restating what I wrote in July some months later about what I wanted NFTBC to be:

A buy-side version of a sell-side note.

I’ll explain. It’s not a concise pitch of a ready-to-eat single-use investment idea. But neither is it unbiased long-form research with a near-term target price. It’s long-form research, but wearing a buy-side hat - and the hat of someone who considers himself a business owner, rather than someone jumping from one thing to the next. It’s the tortoise rather than the hare. I want it to be food for thought, to help you in your own research - perhaps today, perhaps next quarter, maybe even next year.

While it might look a bit like a pitch, it’s not really intended that way - I am spelling out the various ways in which I think the business can ultimately add value. But I’m not trying to persuade anyone about anything - you can use my research in whatever way is most helpful to you. In practice I may often own the shares myself, and I’ll always tell you if I do.

The approach will typically be more qualitative than quantitative. And while I’ll talk about valuation and some of the key considerations, there will be no sophisticated models and such things. I’ll also talk about timelines, roadmaps and turning points, but I won’t make firm predictions on shorter-term price moves or advise on entry points. I’ll be honest with you, I’m not much of a timing specialist and tend to be a bit early. From my conversations with you, I can see that you’re sophisticated investors - you have your own approaches to valuation and timing. While I’m happy to talk about such things in separate conversations, it won’t be emphasised in my research.

Next, a few other thoughts about future direction. Out of the professional habits of my last decade more than anything else, I’m still somewhat biased towards large caps and healthcare - thus far 50% of the stocks I have written about have been in the broader healthcare domain while the average market cap has been $40bn. I envisage exploring some more opportunities outside of healthcare and further down the market cap spectrum in future. I previously set a floor of $5bn, but I would like to reset this to the low single digit billions - merely to expand the opportunity set a bit further. I still want NFTBC to be relevant to professional investors managing meaningful amounts of capital, so I won’t push further into the world of small caps and beyond (and there are plenty of excellent writers working in that arena anyway).

Beyond this, I’m still experimenting and open to feedback (get in touch) - NFTBC will continue to evolve. One such evolution is The NFTBC Digest, a semi-regular email that goes to full subscribers only.

One other thing that’s going to change is disclosure around my own portfolio weightings to NFTBC stocks - for full NFTBC subscribers only. While I write about numerous stocks, I don’t necessary have equal excitement about each. I think the easiest way to convey the distinction, is simply to show you what I’m up to. If I was in your shoes, I’d probably want to know the same - it’s a reasonable expectation. I was somewhat reluctant to do this at first, for two reasons. First, I didn’t want disclosure to change the way I invest. I think that one of the available means to doing well over time, is to have the luxury of not caring what other people think - and this is particularly applicable to personal accounts. Second, I didn’t want to run any risk of NFTBC turning (even unwittingly) into some kind of portfolio service, as opposed to a research service. These two issues are still on my mind, and I haven’t come up with the right resolution yet. But I’m thinking disclosure will be relatively infrequent and periodic, rather than live trade-by-trade updates. I will tell you if I’m adding or reducing though - which I have started doing anyway.

Beyond that, I just want to say thanks to all NFTBC readers, both free and paying. Thanks for reading and sticking around. I hope to produce some interesting content for you in the months to come.

Stocks

Let us now talk about stocks - in the order that I first wrote about them. I’ll do a quick recap of 2025, provide a brief thesis (follow the links to go deeper) and set out a few thoughts for 2026.

[NFTBC does not give advice - please do your own research. I currently own shares in each of these names]

Regeneron

Reflections on 2025

When I published the deep dive at the start of February, I was excited about REGN’s valuation and future prospects, but uncertain about what might transpire in 2025 with the entry of Eylea biosimilars. I mused that REGN shares could drop another 25% before reaching the bottom - just like they did during the last Great Eylea Scare of 2019. In the event, they dropped 28%, although not entirely due to events I had foreseen - instead, persistent delays to important supplemental approvals of Eylea HD in the US due to regulatory issues with REGN’s third party filler (Catalent). REGN’s market cap plunged close to $50bn in June - making for an absurdly low enterprise value once you include net cash of approximately $15bn.

But Eylea aside, REGN actually accomplished quite a lot in 2025 including breakthrough data in adjuvant CSCC, highly differentiated data in gMG, Proof of concept in preserving lean muscle in GLP-1 induced weight loss, phase III wins with novel allergy therapies in areas of high unmet need - I could go on. Additionally and for the first time, REGN started to host investor round tables and we learnt more about the scale of their ambitions in Factor XI and multiple myeloma.

In the end the shares closed the year up around 15% from where I published.

Thesis

REGN has arguably the most productive drug R&D engine in the industry - over the course of the last 15 years, REGN-invented and developed drugs have grown from effectively nil revenue to almost $30bn annualised. I think they’ll do better than that in the next 15 years, and keep more of the economics than in the past. Combined with a low valuation (2026 consensus unlevered P/E of ~12.5x), this gives the shares high optionality. While it’s impossible to predict precisely how well REGN will do in future, if you can live with the uncertainty it’s quite compelling in my view. Read more here (paywall).

Thoughts for 2026

I’m now a lot more positive on REGN than I was a year ago - the Eylea bogey will be easier to beat this year and after much delay the missing Eylea HD approvals are finally coming into view. This gives Dupixent, Libtayo and lower Sanofi reimbursement payments (from Q3 onwards) the opportunity to contribute meaningfully and for earnings to grow faster than currently forecast (i.e. consensus is probably too low). There will be plenty to look out for in the pipeline too - most notably the late-stage fianlimab readout. Last, the outlook for 2027 is highly favourable and I assume investors will start to discount it at some stage this year.

WPP

Reflections on 2025

WPP is certainly one of my worst stocks in all my years of investing. The shares are down 50%+ since I published the post at the end of February 2025. The gist of what happened is that WPP lost a whole series of client retention pitches to rival Publicis - and certainly in a way that was wholly unexpected at the start of the year. And this all coincided with ramping investment in WPP’s internally-developed marketing tech platform ‘WPP Open’. The result has been a collapse in operating profit in a year it was supposed to be flat and on a path to acceleration.

I remain highly suspicious of the common narrative going round that WPP has been rapidly disrupted by AI. I think the explanation, for now, is more prosaic. Specifically, Publicis has had a much more compelling pitch to make to clients in 2025 - especially in media due to its data assets. It also helps that Publicis has a much more client-obsessed CEO than WPP’s former head Mark Read. Business Insider sums it up well with this anecdote:

During the pitch process this year for Mars’ $1.7 billion media business — before Rose was in-post as WPP CEO — the confectionery giant summoned all the agencies involved to meet on a cold January morning at the M&M’s Store in central London.

Sadoun [Publicis CEO] turned up about an hour earlier than the scheduled time. The Mars clients hadn’t arrived yet, and the doors to the store were locked shut. He waited outside on Leicester Square. Once Mars’ marketing team arrived, Sadoun greeted them, and they duly invited him in for coffee — much to the chagrin of the competing agencies, who weren’t able to take advantage of the opportunity to get extra face time with the clients. Mars this summer moved its media account from WPP to Publicis.

While it would have been impossible for anyone to predict the scale of the client losses, I could have been more on top of the general industry perception around the WPP/Publicis media dynamic. In effect, WPP is proposing to change industry practise with a new data strategy altogether - through inertia, clients have remained sceptical until they’ve taken the plunge and tried it, and until then Publicis remains king. What I still don’t know is whether I’m simply flat out wrong or just much too early. In any case, what I took to be signal initially, turned out not to be. But I’ll be honest with you - for all the ongoing risk of appearing like an imbecile, I’ve still got a hunch it might work. I remain intrigued, or curious at the very least. But mere hunches, of course, should be sized appropriately. Over the years I can think of at least a couple of situations where a minus 50-60% ultimately worked out quite well for me in a relatively short timeframe (in each case via acquisition) - but this is most likely the exception rather than the rule. We’ll see…

If there’s an investing lesson here, it’s something like this: the greater the departure envisaged from a company’s recent trajectory, the greater the confidence you need in management to pull it off. I placed more confidence in former CEO Mark Read than the evidence justified. Perhaps Read’s strategy will prove the critics wrong in the end but he was too optimistic or naive on the timeframe (as was I).

Thesis

While there’s little question that WPP gives off vibes of a raging dumpster fire, if you look more closely it’s also the most forward-thinking of the agency holdcos, having reinvented its business around an internally developed end-to-end marketing automation platform - a platform available both as self-serve or as a hybrid managed service alongside creative talent. So the bull case is that WPP will emerge from the AI revolution as an unexpected winner, by taking advantage of the paradigm shift to upgrade its business model away from billable hours and more towards technology fees and outcomes. If WPP can return merely to 2024’s levels of profitability it would be trading at ~4x earnings. Currently >80% of analysts have WPP rated at sell or hold. Perhaps that’s for good reason, but if WPP does anything other than shrink, the shares could do quite well. To learn more (or just have a laugh at my comically bad timing) my WPP posts are free to read here.

Thoughts for 2026

My working assumption is that WPP will be acquired before long, given the distressed price tag - probably by private equity. While I’d prefer this not to happen (so we can see things play out), it potentially puts a floor under the shares as there will come a time when private equity simply cannot resist. Come what may 2026 should be fun to observe and I expect we’ll gain greater clarity on the direction of travel after new CEO Cindy Rose outlines her strategy. If WPP remains independent, I plan to write an update in the coming months and I have some thoughts percolating about that.

Bruker

Reflections on 2025

The Bruker deep dive went out in mid-April. At the time, and much like REGN, I was very constructive long-term but highlighted the nearer-term reservations and potential headwinds - specifically around NIH funding and US border tariffs. What I hadn’t anticipated was the sudden severity of the funding crunch or, for example, 40% tariffs on Switzerland 🤨 (where BRKR has much of its manufacturing capacity). Neither did I foresee the second-order consequences of the delays to release of China life science stimulus funds as a precaution in response to US tariffs - all of this put BRKR’s margins in a tough spot for a couple of quarters, resulting in a dilutive equity raise in order to prevent debt covenant breaches. Things escalated pretty quickly and we saw reflexivity at work - BRKR is now worth slightly less as a result of having a weak share price at the time of the share issue. Nevertheless shares ultimately closed the year up 24% from where I published in mid-April.

Thesis

BRKR is massively under-earning on operating margins - about 13% in 2025 against a credible ambition of mid-20s in the mid- to long-term. This is on top of mid- to high-single digit organic growth supported by leading positions in important growth markets: multi-omics, spatial biology, structural biology, specialist diagnostics, semiconductor metrology, superconducting materials etc. Mid- to high- teens EPS growth is likely to be sustained for an extended period, quite a bit ahead of consensus. Read more here (paywall).

Thoughts for 2026

With management committed to 300bps of margin expansion this year, things are looking much more constructive than 2025. The unknown is the revenue part of the equation but there are already some positives lining up including: 1) a series of major customer orders came in towards the end of 2025, 2) recent management comments around strong launches of new mass spectrometry instruments and 3) a possible thawing of the research funding environment in the US.

BMW

Reflections on 2025

My originally announced intention was to start publishing about BMW in mid-April - in the end I chickened out and waited until July. April was around the time of ‘Liberation Day’ - peak tariff uncertainty. I found it difficult to imagine anyone would be interested, but with hindsight it would have been the best time in terms of share price performance. By July, the trade situation was starting to settle down a bit and by the end of the month a US-EU truce was agreed.

In any case, BMW preferred shares were the best performing NFTBC stock from point of publishing in 2025 - closing the year up 30%. Other than tariffs the main 2025 events were the ongoing struggles in China and, more importantly, the initial launch of Neue Klasse - which went about as well as I could have hoped for.

Thesis

I believe BMW to be a much better business than almost all other legacy automakers. After major multi-year investments they’re about to launch 40 models in 2 years, with important differentiated technology advances (Neue Klasse) and significantly lower BEV cost base. I expect BMW to resume volume growth in the coming years and with lower fixed costs in 2028 vs 2022. Combined with share repurchases, BMW is perhaps a 7% EPS CAGR story from here relative to a single digit P/E. You can read more here for free.

Thoughts for 2026

While I’m excited on, say, a 3-year view, I think 2026 is hard to predict. My main reservation is China, which I expect to be an ongoing profitability headwind at least until Neue Klasse starts to ramp there in H2. It’s also unclear what impact new launches will have on the sales and profitability of older models during the ramp phase. On the positive side of the ledger, BMW will continue to ramp down investment levels in 2026 - positive for both margins and cash flow. Moreover, as the year progresses we’ll get more visibility into Neue Klasse launches, uptake and the pipeline - there’s a possibility this starts to snowball and informs investor expectations around valuation before the fact. For example, we heard recently that the first Neue Klasse model is already sold out in Europe for 2026. Then there’s the tariff situation - the EU Parliament is yet to ratify zero tariffs on US imports (important for BMW) as well as the looming Supreme Court decision. Should be a fun year.

PTC

Reflections on 2025

Having posted 3 months ago, I think this one needs time to play out some more. From the time of posting to the end of the year, the shares were down 14% and I indicated at the time that I was keen to do some averaging down if the shares were to suffer a setback. We haven’t got to that stage yet - but it could happen and I would actually like it to (other things being equal). As many readers will already be aware, we’re heading into 2026 with weak sentiment around software - to be continued.

Thesis

PTC has successfully evolved from a legacy CAD provider into an architect of the ‘digital thread’ with a market-leading portfolio in CAD and PLM that is now 95% recurring. The core thesis rests on a pivot from the portfolio assembly phase to sales execution: under new CEO Neil Barua, PTC is optimising its go-to-market strategy to unlock double-digit ARR growth through cross-sell, upsell, seat expansion, SaaS conversions and untapped pricing power. Further optionality rests in Onshape (think “the Figma of CAD” and you’re leaning in the right direction) and a structural advantage in AI deployment, where PTC’s Windchill serves as the incumbent system of record for many manufacturing businesses. With ARR growing ahead of costs as well as commitment to share count reduction, I think PTC is good for per-share free cash flow compounding in the teens as against a multiple of 20-21x. You can read more here (paywall).

Thoughts for 2026

The main thing I’ll be looking out for this year is progress in the go-to-market transformation from around the Springtime onwards - accelerating bookings. And the other thing to watch will be the ongoing rollout of AI features and more announcements around the AI strategy which will continue to evolve.

Merck KGaA

I’ll be brief on Merck seeing as it was only posted a month ago. The shares are up around 15% since the post but, much like PTC, I’d prefer them to go down so I can buy more (other things being equal).

Thesis

Merck is primarily a collection of ‘wonderful’ and ‘good’ businesses among Life Science, Healthcare and Semiconductor Solutions. As we head into 2026 only 2/3 cylinders are likely to be firing - investors are currently getting paid to take on some uncertainty risk around the Healthcare business which is perceived as the weak link. The good news is that Merck has a pretty solid strategy underway for fixing the Healthcare business. I see Merck as roughly a 7% EPS grower with an earnings multiple below history. Read more here (paywall).

Thoughts for 2026

2026 is a transitional year with group performance likely below potential while the company cycles increased investment levels in the Healthcare business, along with loss of exclusivity for one of its drugs. I’m actually more excited about 2027 - and one year is practically an eternity in the markets of today. We’ll see how things evolve, but any sudden loss in investor patience this year could provide a useful opportunity.

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Friends of NFTBC.

A happy new year to All and welcome to The NFTBC Digest, an email received by full NFTBC subscribers only.

From week-to-week, there is all manner of news, links, marginalia and other curiosities concerning NFTBC stocks that I might not otherwise share with you. So this is what The NFTBC Digest is all about. My thinking here is that you can simply scroll to whichever company you’re interested in and see very quickly if there’s anything notable that tickles your fancy and that you haven’t already seen. There won’t be a set frequency - I don’t want to publish for the sake of publishing. Sometimes The Digest might be weekly when there’s plenty happening, but there could be fewer Digests during earnings season or if news is slower.

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