In a relatively weak market environment, the stock of the Hamburg-based biotech group Evotec (WKN: 566480) stands out. The reason for this may be an ad hoc announcement, according to which the company intends to further expand its partnership with the U.S. biotech company Celmatix in the field of women’s health.
In concrete terms, the deepening of the partnership means that Evotec will participate in the current financing round of Celmatix – alongside other investors such as the Life Sciences Innovation Fund and the Topspin Fund. Unfortunately, neither Evotec nor Celmatix announced how much money Evotec would invest in Celmatix and how much it would subsequently receive. In this respect, the transaction cannot really be evaluated at the moment.
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Investors took the news positively. This is probably due to the fact that, in the official Evotec announcement, Dr. Piraye Yurttas Beim said that “Celmatix is based on the idea of making the best possible use of big data and genomics to provide women with information about their reproductive health at an early stage so that they can make better decisions.” Big data is currently still a buzzword that investors are only too jump on board with.
A look at the Evotec stock leads very quickly to the conclusion that Evotec is a great company, but its stock is already very highly valued, perhaps even overvalued. Even on the basis of the recently raised business forecasts, the stock has a KUV 2019e of almost 6.8 and a KGV 2019e of around 68.
On the other hand, however, there is “only” sales growth of around 15% and profit growth of a good 10%. If the stock was therefore valued according to “normal standards”, the fundamentally fair value would actually only be about half of the current value. However, an investor in biotech companies also has to consider the drug pipeline and its medium to long-term potential.
Nevertheless, the stock is still not a bargain, even at the current somewhat reduced price level. In addition, despite numerous positive reports recently, the stock continues to appear weak on the chart. At least a second test of the important chart technical support around $19.94 (€18) seems possible. If this support should hold, the chart picture brightens again immediately. However, if it falls, a chart technical sell signal with a price target of $16.06 (€14.50) is generated here. Hold with stop price just under $19.94 (€18).
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This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in sharedeals.de, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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