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On Friday, HSBC analysts downgraded Eurofins Scientific SE (ERF:FP) (OTC:ERFSF) stock rating from Buy to Hold and significantly reduced their price target from €70.00 to €48.00. The revision follows observations of underperformance in the company’s biopharma business, which accounts for 29% of the group’s sales in Q1 2025. The North American segment of this business, in particular, showed weakness.
HSBC’s analysis indicates that while there was an initial expectation for a recovery in the second half of the year, the ongoing macroeconomic volatility could potentially hinder the anticipated improvement in the US biopharma sector. Despite Eurofins management’s positive outlook, the analysts at HSBC remain cautious.
Furthermore, the Agroscience division of Eurofins is also projected to face short-term softness. Additional concerns were raised regarding potential impacts on the company’s genomics business due to cuts in US federal funding, although this sector is relatively small within the company’s portfolio.
The report highlighted that Eurofins’ organic revenue growth is currently trailing its medium-term annual targets of 6.5%. Given these factors, HSBC analysts suggest that achieving the forecasted mid-single digit organic growth for FY25 may be difficult without a significant uptick in the latter half of the year, a scenario that seems increasingly challenging given the current economic climate.
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