Shares in Evotec SE (NASDAQ:EVO) climbed 8% after Berenberg initiated coverage of the German biotech group with a buy recommendation, arguing that the market is undervaluing the company’s strategic partnerships and core discovery platform.
Berenberg assigned a €10 price target, well above Evotec’s previous close of €5.90 on Xetra.
According to the brokerage, Evotec’s share-price weakness reflects cyclical pressures in biotech financing and short-term execution challenges rather than any fundamental deterioration in the business. Berenberg said recent investor concerns have incorrectly treated these headwinds as structural.
Evotec operates as a contract research organization, offering drug discovery, preclinical development and biologics manufacturing services to pharmaceutical companies, biotech groups and academic partners. The company generated €781 million in revenue in 2023 and recorded negative EBITDA of €41 million that year, based on figures cited by Berenberg.
The bank said its initiation is grounded in the belief that the biotech funding slowdown that weighed on Evotec in 2024 and 2025 has been misinterpreted by the market. Funding levels have now stabilized around pre-pandemic norms, which historically supported consistent demand for outsourced research services.
“Evotec sits at the intersection of rising R&D outsourcing demand and a growing need for capital-efficient drug discovery innovation,” analyst Christian Ehmann wrote. He added that the company’s capabilities and long-term agreements “remain intact” despite near-term softness in early-stage discovery activity.
A key pillar of Berenberg’s investment thesis is Evotec’s collaboration with Sandoz, which includes development work on 10 biosimilars using Evotec’s biologics platform. In July 2025, Evotec agreed to transfer its Toulouse biologics site, J.POD 2, to Sandoz, moving the partnership toward an asset-light model featuring upfront payments, development fees, milestones and royalties.
Berenberg said the revised structure strengthens Evotec’s liquidity position and lowers execution risk, while still allowing the company to participate in the long-term upside of Sandoz’s biosimilar pipeline. The brokerage expects Evotec to earn low-single-digit royalties on net sales once products reach the market, alongside development and milestone payments between 2026 and 2030.
Ehmann noted that the new structure accelerates cash inflows and eliminates a loss-making ramp-up phase, marking a return to Evotec’s traditional capital-light operating approach.
The bank also highlighted Evotec’s exposure to large pharmaceutical customers under long-term contracts, including Bristol Myers Squibb and Janssen, as a stabilizing influence. Berenberg said this client mix, together with cost reductions and management changes introduced in 2024 and 2025, should gradually improve earnings quality.
Evotec reported an EBITDA margin of -5.2% in 2024, which Berenberg expects to turn positive in 2025 and improve to 10.3% in 2026. Revenue is forecast to decline to €751 million in 2026 from €797 million in 2024, before rebounding to €817 million in 2027.
At current valuation levels, Berenberg argued that the market assigns little value to Evotec’s biologics capabilities and long-duration partnerships. “The downside is increasingly reflected in the share price,” Ehmann said, adding that a normalization in demand and better earnings visibility could be enough to trigger a re-rating.