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Investing.com -- Morgan Stanley shifted its stance on European biopharma stocks, with a particular focus on diagnostics players bioMérieux (EPA:BIOX) and DiaSorin (BIT:DIAS), in a note dated Tuesday.
The brokerage downgraded bioMérieux to “equal-weight” from “overweight” while upgrading DiaSorin (DIA) to “overweight” from “equal-weight” following first-half 2025 performance.
The diagnostics market, while pressured by factors such as changes in Chinese reimbursement policy and currency effects, continued to show robust underlying growth, particularly in point-of-care and hospital-based testing.
Strong U.S. and European testing volumes, partly supported by respiratory testing, contributed to this resilience.
Morgan Stanley noted that sector valuation multiples remain elevated compared with broader European MedTech, reflecting investors’ preference for defensive revenue streams.
For bioMérieux, the brokerage cited downside risks to earnings from a combination of factors: a slowdown in non-respiratory BioFire sales, weaker-than-expected flu season trends, significant China market headwinds, and foreign exchange pressures.
Shares had outperformed peers by about 30% year-to-date, and at 28x forward earnings, Morgan Stanley said the stock already reflected its growth profile, capping re-rating potential.
The price target was cut to €124, implying a slight downside, and the rating was revised to “equal-weight.”
In contrast, DiaSorin’s shares had pulled back nearly 20% year-to-date, a decline Morgan Stanley viewed as excessive.
The brokerage argued that the company’s specialty immunoassay portfolio and new molecular diagnostic launches offered sustainable midterm growth, forecasting organic sales growth of 8% in 2026, about 100 basis points ahead of consensus.
Profitability tailwinds, including cost savings from the closure of its German manufacturing site and higher utilization of new platforms, were expected to support margin expansion.
Trading at about 19x 2025 P/E, below its pre-Covid average and peers, DiaSorin was seen as undervalued. Morgan Stanley set a price target of €101, representing about 18% upside.