Company Reports

Narrow-moat Eurofins' second-quarter results were better than expected, with reported revenue for the three months of EUR 1.77 billion or 8% year-on-year growth. The half-year revenue of EUR 3.42 billion represents 48% progress on our full-year forecast, which we think is positive given that the second half usually has higher revenue, especially in the fourth quarter. We maintain our fair value estimate of EUR 72 per share and view the stock as cheap after the recent price volatility.

Luxembourg-based Eurofins is one of the world’s largest testing, inspection, and certification, or TIC companies, with a focus on sample-based bioanalytical tests. Eurofins has global leadership positions in food and feed, environmental, and pharmaceutical testing. By investing in internal expansion as well as external acquisitions, it builds out decentralized “hub-and-spoke” lab networks that offer comprehensive testing solutions and short turnaround times. Customer relationships are often long-lasting, especially with large multinational customers who require a lab partner with a strong reputation and track record, broad testing capabilities that are accredited across many territories, and innovative testing solutions.

Luxembourg-based Eurofins is one of the world’s largest testing, inspection, and certification, or TIC companies, with a focus on sample-based bioanalytical tests. Eurofins has global leadership positions in food and feed, environmental, and pharmaceutical testing. By investing in internal expansion as well as external acquisitions, it builds out decentralized “hub-and-spoke” lab networks that offer comprehensive testing solutions and short turnaround times. Customer relationships are often long-lasting, especially with large multinational customers who require a lab partner with a strong reputation and track record, broad testing capabilities that are accredited across many territories, and innovative testing solutions.

Narrow-moat Eurofins’ first-quarter results were decent, with reported revenue growing 5% year on year despite a 1% foreign-exchange headwind and one less public working day. This is in line with our expectations and represents good progress on the company’s objective of approximately EUR 7.125 billion revenue for 2024. We maintain our fair value estimate of EUR 72 per share with the view that margins will improve over the next two to three years. Shares are currently trading at about a 20% discount to this, and we view shares as modestly undervalued.

Narrow-moat Eurofins reported full-year results and forward guidance that were in line with our expectations. However, we are reducing our fair value estimate to EUR 72 from EUR 75, driven mostly by adjustments to our assumptions on price/sales ratios for acquisitions over the next five years and minor tweaks to our growth assumptions. We continue to view shares as moderately undervalued and believe that Eurofins will be able to improve its profit margins over the next 2-3 years while maintaining mid-single-digit organic growth.

Luxembourg-based Eurofins is one of the world’s largest testing, inspection, and certification, or TIC companies, with a focus on sample-based bioanalytical tests. Eurofins has global leadership positions in food and feed, environmental, and pharmaceutical testing. By investing in internal expansion as well as external acquisitions, it builds out decentralized “hub-and-spoke” lab networks that offer comprehensive testing solutions and short turnaround times. Customer relationships are often long-lasting, especially with large multinational customers who require a lab partner with a strong reputation and track record, broad testing capabilities that are accredited across many territories, and innovative testing solutions.

We are refreshing our thoughts on Eurofins and reaffirming our narrow moat rating. Also, while we are revising our fair value estimate to EUR 75 from EUR 80 due to slightly lower growth assumptions, we continue to view shares as moderately cheap.

Luxembourg-based Eurofins is one of the world’s largest testing, inspection, and certification, or TIC companies, with a focus on sample-based bioanalytical tests. Eurofins has global leadership positions in food and feed, environmental, and pharmaceutical testing. By investing in internal expansion as well as external acquisitions, it builds out decentralized “hub-and-spoke” lab networks that offer comprehensive testing solutions and short turnaround times. Customer relationships are often long-lasting, especially with large multinational customers who require a lab partner with a strong reputation and track record, broad testing capabilities that are accredited across many territories, and innovative testing solutions.

Eurofins’ third-quarter results were roughly as expected with steady top-line growth, as the period of COVID-19-related sales drag has ended. Our fair value estimate remains unchanged, as cash flows generated since our last valuation update are largely offset by marginal adjustments to our near-term assumptions to reflect recent trends and management’s reiterated full-year 2023 guidance. Shares currently look undervalued, providing a potential opportunity to invest in what we see as a solid, narrow-moat business with global market-leading positions and sound investment strategies.

We maintain our EUR 80 fair value estimate for narrow-moat Eurofins following second-quarter results that were about as expected. Revenue growth excluding the loss of COVID-19 sales accelerated sequentially from the first quarter and held strong at 7% year over year for the first half of 2023. The firm’s pricing power has supported this robust revenue growth and is expected to help fully overtake the drag of lost COVID-19 sales on revenue in the back half of the year. However, macroeconomic effects from the war in Ukraine and foreign exchange headwinds persist, weighing on profitability gains and causing management to decrease full-year 2023 guidance.

Narrow-moat Eurofins posted solid first-quarter results with strong revenue growth despite the loss of COVID-19-related sales. Macroeconomic pressures across the industry may favor the firm once the dust settles, particularly in food, feed, and environmental testing, where it holds the market lead. We are maintaining our fair value estimate of $80 per share.

Luxembourg-based Eurofins is one of the world’s largest testing, inspection, and certification companies. It provides a range of pharmaceutical services such as discovery pharmacology, genomic sequencing, and product quality testing. Eurofins has global market leadership in the testing specialties of food and feed, environmental, and pharmaceutical products. Its strategy focuses on gaining customers by providing complex testing solutions at short turnaround times, with testing efficiency supported by the firm’s hub-and-spoke network of laboratories. Customer relationships are often long-lasting, with customers unlikely to switch to another laboratory partner because of a confluence of factors, including the high cost of failure from testing errors, lack of cost savings from switching, and Eurofins’ ability to offer custom testing solutions.

Narrow-moat Eurofins reported decent full-year results, given global macroeconomic headwinds, the war in Ukraine, and a steep decline in COVID-19-related sales. Organic revenue was flat year over year while the company felt the pressures of the mentioned headwinds on an EBITDA and net profit basis, both down 23% year over year. Management provided solid 2023 guidance and its long-term outlook through 2027. The company’s guidance is roughly in line with our projections, and we are maintaining our EUR 80 fair value estimate. Shares appear undervalued, especially given the market’s likely overreaction to the headwinds in the fourth-quarter and full-year results.

Narrow-moat Eurofins reported solid third-quarter results with no change to its 2022 outlook, despite global macroeconomic headwinds and the war in Ukraine. Organic revenue growth and value-added acquisitions compensated for the decline in coronavirus sales year over year. We are maintaining our EUR 80 fair value estimate, and shares remain undervalued at EUR 62.

Luxembourg-based Eurofins is one of the world’s largest testing, inspection, and certification companies, providing a range of pharmaceutical services, such as discovery pharmacology, genomic sequencing, and product quality testing. Eurofins has global market leadership in the testing specialties of food and feed, environmental, and pharmaceutical products. Eurofins’ strategy focuses on gaining customers by providing complex testing solutions at short turnaround times, with testing efficiency supported by the firm’s hub-and-spoke network of laboratories. Customer relationships are often long-lasting, with customers unlikely to switch to another laboratory partner because of a confluence of factors, including the high cost of failure from testing errors, lack of cost savings from switching, and Eurofins’ ability to offer custom testing solutions.

Luxembourg-based Eurofins is one of the world’s largest testing, inspection, and certification companies, providing a range of pharmaceutical services, such as discovery pharmacology, genomic sequencing, and product quality testing. Eurofins has global market leadership in the testing specialties of food and feed, environmental, and pharmaceutical products. Eurofins’ strategy focuses on gaining customers by providing complex testing solutions at short turnaround times, with testing efficiency supported by the firm’s hub-and-spoke network of laboratories. Customer relationships are often long-lasting, with customers unlikely to switch to another laboratory partner because of a confluence of factors, including the high cost of failure from testing errors, lack of cost savings from switching, and Eurofins’ ability to offer custom testing solutions.

Eurofins reported a mixed second quarter with surprisingly steady revenue growth and upbeat guidance, though this was offset by a decline in margin from a mix shift away from COVID-19 products and the effect of higher operating costs. We are maintaining our EUR 80 fair value estimate and narrow moat rating, and shares remain fairly valued even after a moderate share price decline following earnings.

Narrow-moat Eurofins provided a first-quarter sales update that largely met our expectations, and we still expect full-year sales to decline from lower COVID-19-related contribution. We are maintaining our EUR 80 fair value estimate.

Luxembourg-based Eurofins is one of the world’s largest testing, inspection, and certification companies, providing a range of pharmaceutical services, such as discovery pharmacology, genomic sequencing, and product quality testing. Eurofins has global market leadership in the testing specialties of food and feed, environmental, and pharmaceutical products. Eurofins’ strategy focuses on gaining customers by providing complex testing solutions at short turnaround times, with testing efficiency supported by the firm’s hub-and-spoke network of laboratories. Customer relationships are often long-lasting, with customers unlikely to switch to another laboratory partner because of a confluence of factors, including the high cost of failure from testing errors, lack of cost savings from switching, and Eurofins’ ability to offer custom testing solutions.

Eurofins had a solid end to the year driven by robust COVID-19 sales, which exceeded 20% of full-year revenue, though operating costs were a bit higher compared with our pre-earnings expectations. Our narrow moat rating and EUR 80 fair value estimate are unchanged after adjusting our model for slightly less margin expansion, offset by maintaining the U.S. corporate tax rate at 21% and the time value of money. We see the shares as fairly valued.