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On Thursday, Tecan Group AG (SIX:TECN:SW) shares faced a downgrade by Deutsche Bank (ETR:DBKGn) from ’Buy’ to ’Hold’. The firm also lowered the price target for Tecan stock to CHF225.00 from the previous CHF298.00. The revision followed the Q4 Life Sciences lab tools earnings season, which showed signs of improvement in the sector. Nevertheless, Deutsche Bank highlighted concerns over the new US National Institutes of Health (NIH) policy that could affect future funding.
Tecan, which generates approximately 7-8% of its group sales from NIH funding, is deemed at risk due to the potential budget cuts. The uncertainty surrounding the extent of these cuts has led to concerns about the company’s financial outlook. After issuing two profit warnings in 2024, Tecan is expected to reflect this uncertainty in its 2025 guidance, which could prompt further adjustments to consensus estimates.
In their commentary, Deutsche Bank analysts noted the sector’s recent reprieve but cautioned about the impact of the NIH policy on Tecan’s sales. Given that a significant portion of the sales linked to NIH funding is believed to be related to instruments, the policy change stands to considerably affect Tecan’s performance.
The bank’s decision to downgrade the stock comes in anticipation of Tecan’s forthcoming guidance in March. Investors are advised to be aware of the potential for more conservative estimates that may be released by the company’s management, taking into account the NIH funding situation.
With the new price target set at CHF225.00, Deutsche Bank’s stance on Tecan stock has shifted to a more cautious approach as the industry awaits further details on the NIH policy and its implications for companies reliant on federal research funding.
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