Berenberg has moved Evotec SE to a "hold" recommendation from "buy" and reduced its price objective to €3.60 from €9.40 after the German drug discovery company sharply trimmed its full-year 2026 guidance. The downgrade followed Evotec's preliminary H1 2026 results and accompanying guidance reset, a development that coincided with a drop in the company's shares on Thursday.
In its preliminary results, Evotec now anticipates group revenue for FY2026 in the range of €570 million to €610 million, and adjusted group EBITDA of negative €70 million to negative €105 million. Those figures stand well below pre-event consensus, which had been €730 million of sales and €33 million of adjusted EBITDA.
Berenberg attributed its rating change principally to shifting timing assumptions. The brokerage said the company now expects some of the previously anticipated revenues to materialize later, moving into 2027 rather than 2026. "As it stands, we believe the phasing of important partnerships is uncertain," Berenberg analyst Christian Ehmann said, and that limited visibility was the key reason for the downgrade.
According to Berenberg's summary of a management conference call, Evotec framed the revision as a timing-related issue rather than a structural deterioration. Management pointed to prolonged sales cycles for several major partnerships as the driver of the revision, the broker said. The rebased FY2026 guidance, Berenberg noted, is predicated exclusively on high-confidence, existing contracts.
The broker also highlighted signs of recovery in short-cycle contract research organization (CRO) leading indicators and flagged a prospective recovery tied to Evotec's collaboration with Bristol-Myers Squibb. Berenberg said that partnership could contribute a rebound of €70 million to €90 million in 2027.
Berenberg said its core investment case for Evotec is now concentrated on management's ability to convert roughly 20 large pharmaceutical opportunities currently in the pipeline into high-margin revenue in the coming year. The brokerage stressed execution as the central determinant of the company's near-term outlook.
At the segment level, Berenberg drew attention to a weakening in Evotec's Discovery & Preclinical Development (D&PD) business. The brokerage reported D&PD segment revenue declined 16% year-on-year to €228 million in H1 2026. At the same time, Berenberg noted that net sales excluding strategic partners actually rose 28% year-on-year.
Overall, Berenberg described the guidance reset as a setback that has reduced near-term visibility to what it called an all-time low for the company. The broker pointed specifically to the "sheer scope" of uncontracted strategic partnerships and previously assumed high-margin milestones that had been folded into the earlier FY2026 outlook.
On the cost side, Berenberg acknowledged Evotec's "Horizon" transformation program remains on track to deliver 20-30% of its targeted €75 million in run-rate savings during 2026. However, the broker said those savings are not large enough to compensate for the delayed recognition of high-margin partnership revenues.
As a consequence of the guidance change, Berenberg revised down its sales estimates by 18.7% for 2026, 17.3% for 2027 and 20.9% for 2028 versus its prior forecasts. The brokerage's adjusted EBITDA projections were updated to €16 million for 2026, €82 million for 2027 and €134 million for 2028. Berenberg noted these adjusted EBITDA figures replace earlier estimates that were not presented on a directly comparable basis.
Finally, the broker reset its earnings-per-share expectations to negative €0.97 for 2026, negative €0.26 for 2027 and €0.09 for 2028.
Contextual takeaway - The market reaction and Berenberg's revisions center on timing risk: several revenue streams tied to strategic partnerships were pushed out of FY2026, and the company now relies explicitly on contracts it considers high certainty. This has prompted substantial downward revisions to near-term sales and profitability expectations while leaving the pace of recovery dependent on converting a sizable pipeline of pharma opportunities.