Why Bio-Techne (TECH) Is Poised for Strong Outperformance in a Rebalancing Life Sciences Sector

The life sciences sector is undergoing a profound realignment, driven by shifting capital flows, macroeconomic pressures, and the accelerating commercialization of cutting-edge technologies like cell and gene therapy and spatial biology. In this evolving landscape, Bio-Techne (TECH) stands out as a compelling case of valuation dislocation and margin expansion potential, offering a rare combination of high-growth exposure to transformative markets and a disciplined operational framework that positions it to outperform its peers.

Valuation Dislocation: A Premium on Future Growth

Bio-Techne's trailing twelve-month (TTM) P/E ratio of 70.82 (as of July 2025) appears lofty at first glance, especially when compared to the sector's average of 56.19. However, this premium reflects a critical disconnect: the market is still pricing the company based on its 2024 earnings of $1.07 per share, while its forward-looking fundamentals—particularly in high-margin verticals—suggest significantly higher earnings potential.

The company's earnings growth has been robust. Despite a 1.97% annual revenue increase in 2024, EPS has surged due to operational leverage in its higher-margin businesses. For instance, its spatial biology segment, which now generates near-$120 million in revenue, operates at an EBITDA margin approaching 30%. Meanwhile, its Wilson Wolf division—a critical supplier of GMP reagents and bioreactors for cell therapy—has driven mid-20s TTM growth, with revenue volatility tied to the cyclical nature of clinical trial spending.

This volatility creates an artificial drag on reported margins, masking the underlying strength of Bio-Techne's business. The company's adjusted operating margin of 34.9% in Q3 2025 (excluding amortization, stock-based compensation, and other non-recurring costs) far exceeds its GAAP-reported 12.27% margin. This discrepancy highlights a key opportunity: as the company continues to scale its higher-margin businesses and stabilize its revenue streams, the gap between GAAP and adjusted metrics will narrow, unlocking significant valuation upside.

Margin Expansion: From Pressure to Potential

The recent contraction in Bio-Techne's operating margin—down from a historical average of 29.16% to 12.27% in Q3 2025—has been driven by macroeconomic headwinds, including global tariffs, NIH funding uncertainty, and softness in the U.S. academic and Chinese markets. Yet, these are short-term challenges in a business with structural advantages.

First, Bio-Techne's product mix is inherently high-margin. Its diagnostics and instrumentation segment, which includes automated Western blot systems and biologics QC tools, generates strong recurring revenue through consumables. The Protein Simple franchise, for example, has driven upper single-digit growth in Q3 2025, with limited direct competition in niche areas like automated immunoassays. Second, its cell and gene therapy supply chain is uniquely positioned to benefit from the industry's transition from clinical trials to commercialization. Wilson Wolf's role in five approved therapies means it will capture a disproportionate share of the value as these treatments scale.

The company's margin trajectory is also supported by disciplined cost management. Despite rising operating costs, Bio-Techne has maintained a 34.9% adjusted operating margin, outperforming the industry's average of 6.93% in Q2 2025. This operational efficiency, combined with its $500 million share repurchase plan and strategic M&A appetite, signals a management team focused on capital allocation and shareholder value.

Strategic Positioning: Capitalizing on Megatrends

Bio-Techne's long-term outperformance will hinge on its ability to dominate three high-growth areas:
1. Cell and Gene Therapy: With Wilson Wolf's bioreactors and GMP reagents, the company is a critical enabler of therapies like CAR-T and CRISPR-based treatments. As these therapies move from niche to mainstream, demand for Bio-Techne's tools will grow exponentially.
2. Spatial Biology: This field—focused on understanding tissue biology in 3D contexts—is still in its infancy but is projected to grow at a 20%+ CAGR. Bio-Techne's spatial biology tools, already generating $120 million in revenue, are positioned to capture a leadership role.
3. Diagnostics and Instrumentation: The company's automated platforms, with their high consumable pull-through and limited competition, offer a durable moat.

These initiatives are not speculative; they are already contributing to revenue and margin expansion. For example, Wilson Wolf's mid-20s TTM growth and spatial biology's 30% EBITDA margins demonstrate that Bio-Techne is not just riding the megatrends—it's shaping them.

The Investment Case: Buy for the Long Term

While Bio-Techne's valuation appears stretched on a GAAP basis, the reality is that the market is underestimating the company's long-term earnings power. Its adjusted metrics, combined with its strategic positioning in high-margin, high-growth markets, suggest a fair value significantly above current levels.

The risks are clear: macroeconomic volatility, regulatory shifts in NIH funding, and near-term margin pressures. However, these are precisely the types of challenges that create buying opportunities in disciplined, capital-efficient businesses. For investors with a 3–5 year horizon, Bio-Techne offers a rare combination of valuation dislocation, margin expansion potential, and strategic differentiation.

In a sector where many players are struggling to maintain profitability, Bio-Techne is uniquely positioned to outperform. The question is not whether the company can grow—it has already proven its ability to do so—but whether the market will recognize the full value of its high-margin, high-growth engine in time.

Conclusion: Bio-Techne is a buy for long-term investors seeking exposure to the next phase of life sciences innovation. The current valuation dislocation represents a compelling entry point for those willing to look beyond short-term noise and focus on the company's structural advantages.