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On Wednesday, KeyBanc Capital Markets adjusted its stance on Bio-Techne Corp. (NASDAQ:TECH), downgrading the company's stock rating from Overweight to Sector Weight. The stock, currently trading at $48.81, has declined over 16% in the past week and is now near its 52-week low. According to InvestingPro data, the company's RSI suggests oversold conditions. The decision comes in light of apprehensions regarding potential federal government funding cuts that could impact the National Institutes of Health (NIH) and academic research sectors.
The KeyBanc analyst highlighted that Bio-Techne's significant revenue dependency on academia, which is around 21% for fiscal year 2024, poses a risk due to its exposure to the U.S. academic and NIH market. This percentage is notably higher compared to most of the company's peers. With a market capitalization of $7.7 billion and annual revenue of $1.2 billion, the company maintains strong financial health with a current ratio of 3.94, indicating robust liquidity. The analyst also pointed out that approximately half of this revenue is connected to the U.S. academic and NIH market.
Furthermore, the analyst expressed concerns about the sales in China, which represent about 9% of Bio-Techne's fiscal year 2024 revenue. The ongoing tariff debates contribute to the uncertainty surrounding these sales. Despite these concerns, the analyst acknowledged the positive momentum in late-stage and approved therapy programs, which was evident at the Interphex conference last week.
Bio-Techne's rapidly growing GMP proteins, which are estimated to contribute a significant percentage to the company's revenue, were noted as a positive aspect. However, competitors such as LONN, RGEN, and STVN were identified as almost pure plays in this market segment, which could pose a competitive challenge for Bio-Techne.
The resilience of Bio-Techne's Diagnostics business, which is expected to comprise approximately 29% of fiscal year 2025 estimated revenue, was also mentioned. The Diagnostics and Spatial Biology sectors are seen as likely to remain robust despite the broader challenges. The company maintains healthy gross profit margins of 66.2% and has demonstrated consistent dividend payments for 18 consecutive years. For deeper insights into Bio-Techne's financial health and growth prospects, including 10+ additional ProTips and comprehensive valuation metrics, visit InvestingPro.
In response to these factors, KeyBanc has released a new model for Bio-Techne, which includes revised lower revenue and margin assumptions for fiscal year 2025 and the subsequent years. The downgrade reflects the firm's recalibrated expectations for Bio-Techne's financial performance in the face of the potential funding cuts and market uncertainties.
In other recent news, Bio-Techne Corp reported its Q4 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.42, compared to the forecasted $0.39. The company also exceeded revenue projections, reporting $297 million against the anticipated $286.14 million. Evercore ISI initiated coverage on Bio-Techne with an Outperform rating and a price target of $75, highlighting the company's strong foundational business and growth potential in various sectors. Additionally, Bio-Techne has launched its new high-throughput Leo System, designed to enhance protein quantitation, which has received positive feedback from early adopters. In legal news, an arbitration decision requires Bio-Techne to pay approximately $37 million to its former CEO, Charles R. Kummeth, due to a stock options dispute. Furthermore, Bio-Techne introduced a GMP-grade transposase mRNA for its TcBuster system, aiming to streamline the development of cell-based therapies. These developments reflect Bio-Techne's ongoing efforts to innovate and expand its market presence.
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