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On Wednesday, Morgan Stanley (NYSE:MS) analyst Remi Grenu upgraded Eurofins Scientific SE (ERF:FP) (OTC:ERFSF) stock rating from Underweight to Equal-weight and increased the price target to €54.50 from €53.00. The adjustment reflects a shift in valuation perception for the company, which now trades at approximately 13x/14x 2025 EV/EBIT and P/E respectively. This valuation is noted as being close to a 10-year low for Eurofins, following a period of devaluation driven by a combination of factors.
The de-rating of Eurofins’ shares has been attributed to a deterioration in organic growth and concerns arising from news related to party transactions. The company’s current valuation shows a roughly 20% discount compared to its peer group, which includes a 5-10% discount below biopharma and diagnostic peers, and a 30% discount below testers. This discount is considered significant by historical standards, being more than one standard deviation below the 10-year average.
Grenu’s commentary suggests that the consensus expectations for Eurofins are reasonable and that an organic inflection point, coupled with improving earnings momentum, could signal an end to the ongoing de-rating of the company’s shares. The analyst’s perspective indicates that with the current discount and the potential for positive changes in the company’s financial performance, the risk-reward profile for Eurofins has become more balanced.
The upgrade in rating and the slight increase in the price target to €54.50 from €53.00 by Morgan Stanley come at a time when the market is evaluating Eurofins’ financial health and future prospects. The new rating and price target suggest a more optimistic outlook for the company’s shares, as they may now be poised for a change in market sentiment.
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