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On Tuesday, Berenberg initiated coverage of Tecan Group AG (SIX:TECN:SW) with a Buy rating and set a price target of CHF220. The firm’s analysis suggests that Tecan, a Swiss company specializing in laboratory automation equipment and medical device manufacturing, is in a strong position to experience mid- to high-single-digit revenue growth over the medium term. This growth is expected to come from the company’s increasing involvement in rapidly expanding sectors within its CHF25 billion addressable end-markets, as well as a higher adoption rate of automation technologies.
Tecan has faced challenges recently, including reduced demand for instruments from biopharmaceutical clients and a weaker performance in the Chinese market. However, Berenberg believes these issues are starting to diminish. This perspective is supported by thorough channel checks and conversations with Tecan’s management team.
The company’s valuation currently stands at 11 times its projected 2026 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA). This valuation aligns with other European diagnostics and life sciences tools companies but is notably lower than Tecan’s historical 30% premium over the past decade.
The stock’s price risk is considered to be tilted towards the upside, according to Berenberg. The firm anticipates that signs of demand stabilization and improved visibility for medium-term growth could lead to a market reassessment of Tecan’s value. The new price target of CHF220 reflects this potential for a positive shift in investor sentiment and a re-rating of the stock.
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