Deutsche Bank has revised its rating for Evotec (EVO, Financial), upgrading the stock from a "Sell" to a "Hold" recommendation. Additionally, the bank increased its price target for Evotec shares from EUR 4 to EUR 7. This shift follows the company's release of new guidance for 2025 and the medium term, which Deutsche Bank describes as providing crucial direction for investors.
The bank's analysis suggests that Evotec's revised forecasts are realistic, despite the adjusted EBITDA projections being lower than expected. Deutsche Bank believes the guidance may lead to sizeable downward adjustments in consensus earnings forecasts. However, it also maintains that this guidance establishes a solid foundation for the stock's valuation.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 3 analysts, the average target price for Evotec SE (EVO, Financial) is $6.00 with a high estimate of $8.00 and a low estimate of $3.00. The average target implies an upside of 46.88% from the current price of $4.09. More detailed estimate data can be found on the Evotec SE (EVO) Forecast page.
Based on the consensus recommendation from 3 brokerage firms, Evotec SE's (EVO, Financial) average brokerage recommendation is currently 2.7, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Evotec SE (EVO, Financial) in one year is $12.06, suggesting a upside of 195.23% from the current price of $4.085. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Evotec SE (EVO) Summary page.
EVO Key Business Developments
Release Date: April 17, 2025
- Group Revenue: EUR797 million, a 2% increase versus 2023.
- Shared R&D Revenue: Declined from EUR673 million in 2023 to EUR611 million in 2024.
- Just - Evotec Biologics Revenue: EUR185.6 million in 2024, up from EUR108.4 million in 2023, a growth of 71%.
- R&D Spending: Reduced by 26% from EUR68.5 million in 2023 to EUR50.9 million in 2024.
- Adjusted EBITDA: EUR22.6 million for 2024.
- Q4 Revenue: EUR221.2 million, a 20% increase versus the third quarter.
- Q4 Gross Margin: Improved to 20.8%.
- Q4 Adjusted EBITDA: EUR28.5 million, a EUR33 million uplift versus the prior quarter.
- Operating Cash Flow: EUR74.2 million in the fourth quarter.
- Total Liquidity: Increased by EUR94 million versus third quarter, leading to a year-end balance of EUR397 million.
- Net Debt: Improved to EUR43 million with a net debt leverage of 1.9 times.
- Priority Reset Savings: EUR40 million of run rate savings to be fully P&L visible in 2025.
- Headcount Reduction: Approximately 280 completed role reductions by the end of 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Evotec SE (EVO, Financial) reported strong Q4 2024 results, marking the second-best quarter ever in terms of revenue, with significant operational leverage.
- The company successfully strengthened partnerships with major players like Sandoz, Bristol Myers Squibb, Novo Nordisk, Pfizer, and Bayer, paving the way for long-term growth.
- Just - Evotec Biologics saw a 71% revenue growth in 2024, driven by a strong order book and new deals.
- Evotec SE (EVO) implemented a priority reset, achieving EUR40 million in run rate savings, which will be fully visible in 2025.
- The company is focusing on technology and science leadership, leveraging AI and next-generation technologies to enhance drug discovery and development processes.
Negative Points
- Shared R&D revenue declined from EUR673 million in 2023 to EUR611 million in 2024 due to a persisting soft market.
- The company faced a challenging year with a high fixed cost base and slow market demand for its R&D segment.
- Evotec SE (EVO) anticipates continued softness in the biopharma market throughout 2025, with a potential tipping point for growth not expected until the second half of the year.
- The company is not planning to invest in a new J.POD facility during the current planning horizon, indicating a cautious approach to capital expenditure.
- There are concerns about the indirect impact of potential budget cuts in the US on innovation and the biotech industry, which could affect future growth.
