'Transformation story with significant upside': JPM starts EuroAPI with 'overweight'
09/05/2022 07:48
** JPMorgan initiates EuroAPI EAPI.PA with "overweight",
citing the "transformation story" of the drug ingredients
business spun off from Sanofi SASY.PA
** It points to the group's potential to deliver superior
growth to closest peer Siegfried SFZN.S , despite trading at a
30% discount
** JPM expects increasing investor confidence in growth
outlook - with EuroAPI providing evidence of execution against
mid-term targets - to drive a re-rating of the shares
** It sees potential for acceleration in contract wins,
especially in the firm's contract development & manufacturing
organisation (CDMO) business
** "We see these wins driving margins to over 20% in 2025,"
the broker says, anticipating an EBITDA CAGR of 21% in
2021-2025, ahead of the EU CDMO sector at 17%
** In large molecules, JPM says achievement of EuroAPI's
ambition for top 3 in oligos and top 5 in peptides could deliver
about EUR 200 mln ($210.18 mln) incremental revenue
** In complex chemistry, it sees another possible EUR 200
mln peak and, if either of these targets are met, the group
could deliver 1pp faster growth on top of JPM's forecasts
** Sanofi will keep a 30% stake in EuroAPI while the French
state will acquire 12% in the new company, based on the average
market price over the next 30 days urn:newsml:reuters.com:*:nL5N2WY22N
** On their Paris stock market debut on Friday, shares
traded up 2% from their reference price of EUR 12, valuing the
contract manufacturer's equity at EUR 1.15 bln
($1 = 0.9516 euros)
(Reporting by Juliette Portala)
((juliette.portala@tr.com))