On Friday, Stifel adjusted its stance on Bio-Techne Corp. (NASDAQ: NASDAQ:TECH), changing the stock's rating to Hold from the previous Buy status. The firm has set a price target for the company at $65.00, maintaining the same target as before the downgrade.
The decision to downgrade Bio-Techne's stock comes amid concerns about the company's near to mid-term performance. Stifel noted that the first half of the year showed organic growth to be relatively flat and anticipates a similar trend in the second half. This projection casts doubt on the stock's ability to outperform in the near future.
Stifel's analysis pointed to additional pharmaceutical industry concerns that contributed to the company's recent performance miss. The firm expects the company's valuation to remain in the low twenties for enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratio as the top-line growth stalls.
Furthermore, Stifel has expressed skepticism regarding Bio-Techne's ability to return to double-digit growth by 2025. This is due to the company's fiscal calendar and the expectation that the end markets will continue to be volatile by mid-year. While the firm acknowledges the potential in several areas of Bio-Techne's portfolio, it believes that it may take time for these to significantly impact the profit and loss statement.
In summary, while Stifel maintains a positive outlook on certain aspects of Bio-Techne's business, the firm has adopted a more cautious approach by moving to a Hold position on the stock, with the price target remaining unchanged at $65.00.
InvestingPro Insights
As investors digest Stifel's recent rating change for Bio-Techne Corp. (NASDAQ: TECH), a closer look at the company's financial health and market performance through InvestingPro provides additional insights. With a market capitalization of $10.84 billion and a high price-to-earnings (P/E) ratio of 43.54, the company reflects a valuation that demands scrutiny. The adjusted P/E ratio for the last twelve months as of Q1 2024 is even higher at 47.48, underscoring the premium that investors are currently paying for the company's earnings.
Bio-Techne's revenue growth has been modest, with a 2.37% increase over the last twelve months as of Q1 2024. While this growth rate is positive, it aligns with Stifel's observation of relatively flat organic growth. However, the company's gross profit margin remains strong at 67.81%, indicating that Bio-Techne is maintaining profitability on its sales.
InvestingPro Tips highlight that Bio-Techne is trading at a high EBITDA valuation multiple, which is consistent with Stifel's view on the company's valuation. On a more positive note, the company has demonstrated the ability to cover its interest payments with its cash flows and has maintained dividend payments for 17 consecutive years, which may appeal to income-focused investors. Additionally, Bio-Techne's liquid assets exceed its short-term obligations, suggesting a stable financial position in the near term.
For those looking to delve deeper into Bio-Techne's financials and market performance, InvestingPro offers more tips, including the company's moderate level of debt and a strong return over the last three months. With a special New Year sale on InvestingPro subscriptions, now is an opportune time to gain access to these insights at a discount of up to 50%. Use coupon code SFY24 for an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 for an additional 10% off a 1-year subscription. With InvestingPro, subscribers can explore a wealth of financial data and expert analysis to inform their investment decisions.
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