Lonza upbeat on outlook, but margin growth forecast hits shares

* Lonza net profit more than doubles to 728 mln Sfr

* Proposes stable dividend of 2.75 francs per share

* Analysts say 2018 outlook is cautious, could be raised

* Confirms 2022 targets, including 7.5 bln Sfr sales goal (Recasts, adds CEO, CFO comment, details on M&A strategy)

By John Miller

ZURICH, Jan 31 (Reuters) - Lonza forecast a 2018 operating profit margin that fell short of market expectations on Wednesday, knocking the Swiss drug ingredients maker's shares despite its 2017 earnings beating predictions.

Shares (Berlin: DI6.BE - news) in Lonza, which makes molecules for drug companies such as Roche as well as ingredients for nutritional supplements, were down 3.8 percent to 264.70 Swiss francs at 1305 GMT.

Some analysts said they were underwhelmed by Chief Executive Richard Ridinger's goal for achieving a 100 basis point improvement in core margin for earnings before interest, taxes, depreciation and amortisation (EBITDA).

The EBITDA margin growth goal was less than a third of an estimate by Peter Welford from Jefferies, and half the consensus of other analysts following the company.

"(Lonza's) management has typically been conservative on profit aims, suggesting below the implied potential 4 percent cut to consensus EBITDA," said Welford, who has a "buy" rating.

Core 2017 profit were 806 million francs ($865 million), higher than the 674 million franc average forecast of analysts in a Reuters poll, while Lonza's sales rose 23.5 percent to 5.1 billion francs, matching forecasts.

Full-year net profit for 2017 more than doubled to 728 million francs from 301 million francs in 2016.

Ridinger, a German national and former Henkel KGaA manager, expects 2018 sales to grow by about 15 percent when fully consolidating its $5.5 billion takeover of U.S.-based capsule maker Capsugel last year.

Ridinger also said Lonza was on track to meet its 2022 goal, with sales of at least 7.5 billion francs, a core EBITDA margin of 30 percent, and core return on net assets of 35 percent.

"We are absolutely in line," Ridinger said in an interview, adding nothing has emerged to endanger its five-year targets.

Analysts at Baader Helvea said the cautious tone could leave room for Ridinger to raise his goals.

"There might be further upside for these targets in 2018," Helvea's Laura López Pineda wrote in a note to investors.

BOLT-ONS

After buying Capsugel last year, Lonza has said it was unlikely to hunt for large targets until it had integrated that company's 3,600 employees and 13 facilities on three continents.

Instead, internal growth via strategic partnerships including its pact with French drugmaker Sanofi (LSE: 0O59.L - news) on a Swiss biologics site are at the fore.

Any acquisitions will likely be bolt-ons that Chief (Taiwan OTC: 3345.TWO - news) Financial Officer Rodolfo Savitzky defines as up to about 50 million francs, such as last year when Lonza added Netherlands-based PharmaCell, a cell and gene contract manufacturer, and a former Shire (Xetra: S7E.DE - news) drug site in California.

Savitzky said Lonza was under no pressure to divest any of its businesses, including its lone consumer business, the HTH-brand swimming pool chemicals unit.

Lonza proposed a stable dividend of 2.75 francs per share. (Reporting by John Miller; Editing by Jane Merriman/Mark Potter/Alexander Smith)