Undervalued Biotech: Evotec's 29.5% Price Drop Creates Opportunity for Long-Term Growth

Evotec's stock price has dropped 29.5% this year, but some industry observers see long-term potential due to strategic partnerships and innovation pipeline. Valuation checks indicate the company is undervalued, with a discounted cash flow analysis suggesting an intrinsic value of €35.43 per share, an 83.4% discount to its current price of €5.87.

Evotec, a German drug discovery and development firm, has seen its stock price drop by 29.5% in 2025, yet some industry observers see long-term potential due to strategic partnerships and a robust innovation pipeline. The company’s recent decision to sell its biologics facility in Toulouse, France, to Sandoz Group reflects a broader trend in the pharmaceutical sector towards asset-light strategies .

The sale of the Toulouse asset, expected to close in the fourth quarter, is viewed as a financial win by RBC Capital Markets. The deal is anticipated to boost Evotec’s balance sheet and deliver a tangible return. However, RBC has trimmed its price target and cut earnings and revenue forecasts through 2027, citing persistent uncertainty in the contract research market and near-term project delays as risks for future growth .

Despite the short-term challenges, Evotec’s strategic shift towards an asset-light approach is attracting major industry attention. The company’s management anticipates that the sale will free up resources and enable Evotec to focus on its core competencies in drug discovery and development. This move aligns with broader industry trends, as pharmaceutical companies are becoming more nimble and tuned in to global changes .

Valuation checks indicate that Evotec is undervalued. A discounted cash flow analysis suggests an intrinsic value of €35.43 per share, an 83.4% discount to its current price of €5.87. This discrepancy highlights the potential for long-term gains as investors recognize the company’s strategic direction and growth opportunities .

Evotec’s strategic partnerships and innovation pipeline are key factors that could drive long-term growth. The company’s asset-light strategy allows it to partner with other pharmaceutical firms and focus on its core strengths, enhancing its ability to develop and commercialize new drugs. This approach is particularly relevant in the current market environment, where drug development firms are embracing more flexible and efficient business models .

In conclusion, while Evotec faces short-term challenges, its strategic shift towards an asset-light model and long-term potential make it an attractive investment opportunity for those willing to look beyond immediate market volatility. The company’s focus on strategic partnerships and innovation, combined with a discounted valuation, positions Evotec favorably for investors seeking long-term growth prospects in the pharmaceutical sector.

References:
https://www.ainvest.com/news/hyft-rebranding-strategic-pivot-biotech-ai-driven-future-2509/
https://finimize.com/content/evotec-sells-toulouse-asset-as-it-shifts-strategy