On Friday, Piper Sandler maintained a Neutral rating on shares of Halozyme Therapeutics (NASDAQ: NASDAQ:HALO), with a price target of $52.00. The firm's analysis followed Halozyme's confirmation of its interest in acquiring Evotec for $11 per share, which translates to a fully diluted equity value of approximately €2 billion.
Halozyme, known for its ENHANZE drug delivery technology, sees the acquisition of Evotec as a strategic move that could expand its service offerings to drug developers. The potential acquisition would encompass a range from early drug discovery through to drug product manufacturing, including subcutaneous formulation services.
The company believes that Evotec's business aligns with its growth strategy due to its perceived de-risked nature, as well as its potential for high growth and high margins. This acquisition is expected to significantly extend Halozyme's revenue and EBITDA beyond its current scope with ENHANZE.
The analyst from Piper Sandler noted that while there are no dramatic synergies with ENHANZE immediately apparent, the addition of Evotec's capabilities could be beneficial for Halozyme. The firm highlighted that there is much to consider with Halozyme now actively looking to engage with Evotec to validate its due diligence and pursue the potential transaction further.
In other recent news, Halozyme Therapeutics has proposed a $2 billion acquisition of Evotec SE. The potential merger would combine Halozyme's drug delivery technology with Evotec's drug discovery platform and biologic manufacturing capabilities.
This move is expected to enhance the discovery and development of new medicines, leveraging Halozyme's strong cash generation and balance sheet to invest in Evotec's early-stage programs and new technologies. However, the proposed acquisition is still subject to approval from Evotec's Management Board and Supervisory Board, and other regulatory approvals.
In the meantime, Evotec SE has reported stable revenue of €575.7 million for the first nine months of 2024, thanks largely to a 74% revenue increase from the Just-Evotec Biologics sector. The company's adjusted EBITDA for 2024 is projected to be between €15 million and €35 million, with total revenues expected to range from €790 million to €820 million. Despite a decline in shared R&D revenue due to market conditions and a previous cyber-attack, Evotec SE maintains its full-year guidance.
Strategic partnerships with Sandoz (SIX:SDZ) and Novo Nordisk (NYSE:NVO) have bolstered the order book for 2025, and a transformation initiative, "Reset, Review, Restart," is in progress, aiming to enhance efficiency and save €40 million. These are some of the recent developments at Evotec SE.
InvestingPro Insights
As Halozyme Therapeutics considers the acquisition of Evotec, it's worth examining some key financial metrics and insights about Evotec. According to InvestingPro data, Evotec's market capitalization stands at $1.61 billion, which aligns closely with Halozyme's offer of approximately €2 billion.
Evotec has shown strong recent performance, with InvestingPro Tips highlighting significant returns over the last week (23.49%) and month (75.86%). This surge in stock price likely reflects market reaction to the potential acquisition news. However, it's important to note that Evotec is not currently profitable, with a negative P/E ratio of -18.48 for the last twelve months as of Q3 2024.
Despite the lack of profitability, Evotec operates with a moderate level of debt and its liquid assets exceed short-term obligations, according to InvestingPro Tips. This financial stability could be attractive to Halozyme as it considers the acquisition.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Evotec, providing a deeper understanding of the company's financial position and market performance.
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