Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on EUROFINS SCIENTIFIC. We currently have 1 research reports from 1 professional analysts.
|13Sep16 08:59||PRN||Eurofins Food Safety Systems Partners with AGGI Asociados for Public Food Safety Training in Mexico|
|03Aug16 02:36||PRN||Eurofins Appoints New President for US Microbiology Division|
|02Aug16 03:45||PRN||Eurofins QTA and Q-Interline announce Collaboration for the Advancement of Infrared Testing|
|08Jun16 10:24||PRN||Eurofins Food Safety Systems Partners with McGill University for Public Food Safety Training for Canadian Food Manufacturers|
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Research reports on
Initiating coverage on Eurofins Scientific.
25 Oct 16
Recommendation and upside: We are initiating coverage on Eurofins Scientific (market cap. of c.€7.2bn and a float of c.58%) with a Reduce recommendation and a target price of €393 (c.8% downside). While we acknowledge the company’s dominant position in the attractive bioanalytical industry, its robust growth prospects, superior technical know-how and its successful value accretive M&A history, we believe the current share price (saw a rally of c.26% over the last three months, primarily fuelled by solid H1 16 results and full-year guidance upgrade) fully discounts all these positives. It currently trades at a 2016E EV/EBIT of c.28x (vs. 22x of SGS and 17x of Bureau Veritas), making the valuation highly demanding. Business: Eurofins Scientific operates in the €130bn global Testing, Inspection, and Certification (TIC) market (of which c.45% is outsourced), with a presence across 39 countries. It employs a total workforce of c.25k people across c.250 laboratories and offers c.130k tests/ methods to evaluate the identity, composition, safety and purity of biological products. Unlike SGS, Bureau Veritas and Intertek (the big three in the industry), which cater to diverse industries, Eurofins focuses on the niche bioanalytical testing market (outsourced market size of c.€12bn) consisting of three sub-segments – Food & Feed testing (market size: €2-3bn; market share: c.30%), Pharma/Biotech testing (market size: c.€5bn; markets share: c.10%) and Environment testing (market size: c.€4bn; market share: c.7%), all of which offer stable and strong growth prospects (in the mid single-digit range), mainly driven by the expansion and tightening of regulations, the growing demand for improved safety and quality of food and environment, the increasing trend towards outsourcing, a burgeoning middle class and rising demand in emerging markets. In addition, it has forayed into the c.€160bn clinical diagnostics space in 2014 through the acquisition of Viracor IBT and, since then, has made aggressive strides into this area with the help of several more acquisitions. Need to know: The bioanalytical testing industry is characterised by a number of small regional players, often operating with very low margins, providing excellent opportunities for consolidation by the handful of global players. Over the years, Eurofins has shown great acumen of identifying targets at a reasonable price, successfully integrating them into its group structure and improving profitability of these acquired companies. This has driven the strong growth in both the top-line and the bottom-line, thereby creating value for its shareholders. These acquisitions have also expanded Eurofins’s geographical reach, technological base and product offerings, helping it to become a leading player in the industry (#1 or #2 position in most businesses/countries in which it operates). This aggressive acquisition strategy, however, has come at the expense of its cash generation capabilities. The situation is exacerbated by the fact that unlike SGS, Bureau Veritas and Intertek Group, Eurofins’ business model is more capital intensive (capex is c.8% of sales vs 3-6% for the big three) given its focus on laboratory testing (requires significant capex), with negligible exposure to certification or inspection businesses (which require lesser capex). This is evident in the cash flow examination of the company – while the company has been able to convert c.80% of EBITDA into operating cash flow (over 2011-15), the FCF/EBITDA conversion is decidedly grimmer (average of c.20% over 2011-15). Eurofins’ share capital is primarily held by the founding (Martin) family, through a holding company, Analytical Bioventures, which owns 41.7% of the group’s share capital and 58.5% of the total voting rights, effectively controlling the company. The family remains involved in the day-to-day operations and the long-term strategy execution, as evidenced by their strong representation on the company’s board – three of the five board members belong to the Martin family (Gilles Martin himself, his brother Yves-Loïc Martin and their sister Valerie Hanote).
N+1 Singer - Morning Song 05-12-2016
05 Dec 16
RTHM is acquiring a profitable Canadian listed mobile specialist for equivalent of US$42.5m consideration in shares (88.235m). This helps adds to two growth vectors RTHM is targeting; (i) adds unique exclusive audience (10m unique) and (ii) Exclusive demand Yahoo and Facebook. The business has 15 premium and owned and operated apps which provide users with rewards for activity. The business is expected to deliver c$9m of EBITDA in FY18 including $2m of cost synergies. This equates to just 4.7x EV/EBITDA. This marks what we see the first step in RTHM activity to scale the business and deliver on margin potential (see our initiation notes). Our initial estimates for EPS revisions are very significant - for FY18 are 2.3 cents (currently 0.6) and for FY19 4.3 (currently 2.5). There is a call at 830 for investors and we will revise post this.
Panmure Morning Note 02-12-16
02 Dec 16
We expect CareTech to report FY results to September on 8th December. A positive trading update in October indicated that performance for the year was in line with market expectations therefore we are focusing on the outlook. We expect a confident statement since the end of 2016 showed positive trends across fee rates, expansion in places and occupancy. We believe CareTech is well positioned for further expansion, and remains at an attractive valuation. We retain our BUY and 380p price target.
N+1 Singer - Morning Song 06-12-2016
06 Dec 16
With FY16 volume and revenue already disclosed in the pre-close, the focus in today’s prelims is on PBT (£100.3m versus our £101m) and EPS (96.8p versus our 95.4p). No special dividend triggered this year (none forecast) and DPS is held at 46.8p (N1SE: 48.0p). On end markets, recent commentary is reiterated – the core business is growing, whilst consumer electronics will be subdued in the current year (competitive capacity from Solvay). On currency, there will be a material benefit in the current year (a little more than the £14m to £15m previously indicated), and a further tailwind next year if current rates are maintained (quantum TBC). There is also an investment of £10m today in a minority interest in Magma Global, Victrex’ oil and gas mega programme partner. Although the share price is now close to our TP of 1730p, we feel that there is enough in today’s announcement to retain a positive stance on medium term opportunities with strong cashflow and a special dividend potentially to look forward to in the current year.
Panmure Morning Note 05-12-16
05 Dec 16
This week will see Chi-Med present data on both fruquintinib and epitinib at the 17th World Conference on Lung Cancer, concerning two proof-of-concept trials in non-small cell lung cancer (NSCLC). This morning, the poster presentation ‘A Phase I Study of Epitinib To Evaluate Efficacy And Safety In EGFR Mutation Positive (EGFRm+) NSCLC Patients With Brain Metastasis’ is available for investors to view on Chi-Med’s website.
Panmure Morning Note 01-12-16
01 Dec 16
Last month we highlighted the ongoing trajectory of Tuzistra sales, noting the impact of significant investment in the modified marketing strategy for Tuzistra, supported by the step up in sales personnel and increased marketing expenditure. This morning’s AGM statement and trading update gives some further colour on progress.