Brendan Smith, an analyst from TD Cowen, maintained the Buy rating on Evotec AG. The associated price target was lowered to $5.00.
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Brendan Smith has given his Buy rating due to a combination of factors including Evotec AG’s strategic sale of its JEB manufacturing facility to Sandoz, which is expected to bring in approximately €650 million over the coming years. This deal provides Evotec with significant non-dilutive capital, which is crucial for the company’s financial health amidst current macroeconomic challenges. However, while the transaction offers immediate financial benefits, it also raises questions about the long-term growth potential of the JEB segment.
Despite the uncertainties surrounding the company’s growth trajectory, Brendan Smith sees potential in Evotec’s expansion of its AI/ML offerings. This expansion could drive medium-term growth, although it will depend on the company’s ability to differentiate its platform and the spending appetite of its core customers. Additionally, although Evotec’s Q3 revenues missed consensus expectations due to a slowdown in contract activity, there are early signs of recovery in certain segments, which could support future growth.