Evotec - AI Impact Already Being Felt? (SELL, TP EUR2.00 [5.40], 10pgs)
We believe AI driven changes in pre-clinical research could already be hurting CRO’s following EVT’s updated guidance yesterday. Based on work from our AI thematic, we show that EVT is materially exposed. Moreover, we expect L-T growth trends to be materially lower. We find EVT’s L-T targets unachievable, the SDZ deal ending in 2028 is a big headwind & the BMS deal will end at some point. We estimate these 2 deals are >30% of group revs & most of group EBITDA. FCF barely turns positive in the next 5yrs, on our numbers. It’s unclear to us how the business returns to healthy profitability.For access to the full note, please contact Naresh Chouhan ( )
Evotec is a holding company engaged as a drug discovery solutions company providing drug discovery capabilities to pharmaceutical and biotechnology companies as well as to academic institutions. These drug discovery solutions are provided in form of fee-for service work, integrated drug discovery alliances, development partnerships, licensing of drug candidates and consulting arrangements. Co. is primarily involved in the areas of neuroscience, pain, metabolic diseases, oncology and inflammation. Co. provides its drug discovery activities under the banners of EVT Execute, EVT Integrate and EVT Innovate. Co.'s operations are divided into two segments: EVT Execute and EVT Innovate.
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