On Thursday, Berenberg has adjusted its price target for Tecan Group AG (SIX:TECN:SW), a leading provider of laboratory instruments and solutions, lowering it to CHF328.00 from the previous CHF400.00. Despite this reduction, the firm has maintained its Buy rating on the stock.
The decision by Berenberg follows Tecan's half-year 2024 (H124) results, which were announced on August 13. In response to these results, the firm has made significant revisions to its earnings estimates for Tecan. The rationale behind maintaining the Buy rating lies in the anticipation of a stronger second half of 2024 (H224) and the year 2025.
Berenberg forecasts this improvement due to several factors, including less challenging comparisons with China's previous performance, a solid original equipment manufacturer (OEM) sales pipeline, ongoing recovery in Tecan's life sciences segment, and forthcoming in vitro diagnostics (IVD) replacement cycles.
Despite a reset in expectations and a blow to management's credibility after the less-than-expected H124 results, Berenberg finds Tecan's valuation, at 26 times its 2025 earnings, to now be more aligned with its industry peers. The firm suggests that while there may be limited potential for a near-term increase in Tecan's stock value, the current valuation presents an attractive opportunity for long-term investors.
Berenberg's stance indicates a positive outlook for Tecan's long-term performance, despite acknowledging the near-term challenges the company faces. The firm's analysis suggests that Tecan's fundamentals remain strong and may offer growth opportunities as market conditions evolve.
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