ERF FP

Eurofins Scientific SE

Healthcare


Presented:07/18/2018
Price:€463.00
Cap:$9.10B
Current Price:€55.28
Cap:$11.78B

Presented

Date07/18/2018
Price€463.00
Market Cap$9.10B
Ent Value$12.91B
P/E Ratio36.51x
Book Value€81.79
Div Yield0.52%
Shares O/S17.64M
Ave Daily Vol33,282
Short IntN/A

Current

Price€55.28
Market Cap$11.78B
Eurofins Scientific SE engages in the bio-analytical testing of food, environment, and pharmaceuticals products. Its offers testing and laboratory services for agroscience, genomics, discovery pharmacology and for supporting clinical studies. It operates through the following geographical segments: Benelux, France, Germany, North America, Nordic Region, UK and Ireland, and Other. The company was founded by Gilles Martin in 1987 and is headquartered in Luxembourg.

Publicly traded companies mentioned herein: Eurofins Scientific SE (ERF FP), Healthscope Ltd (HSO AU), Laboratory Corp of America Holdings (LH)

Highlights

The presenter views the recent sell-off in Eurofins (ERF FP) stock as an overreaction to a weaker than expected Q1 ‘18 earnings report. He views the share price weakness as a buying opportunity, and is long the stock, seeing the potential for 50% - 60% upside if management can 1) integrate its two most recent large acquisitions successfully; and 2) continue to grow the company, with a focus on becoming a leader in healthcare/genetic testing services via M&A. To be long the stock, investors must believe in Chairman and CEO Gilles Martin’s vision for the company, as he owns 36% of it. While it is not difficult to trust him, in the presenter’s opinion, as the company had the best share price performance of any company listed in Europe from its 1997 IPO through 2017, the stock has dropped from a peak of ~€560 (Oct 2017) to ~€460 on concerns about the multiples paid for recent deals, future returns on capital, and organic growth. If the company can earn €25/share in 2020, the multiple should improve from 25x forward EPS to 30x, for a €750 target in 12 - 18 months.

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Idea Discussion

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