Investing.com --- RBC Capital Markets has downgraded Sartorius Stedim Biotech S.A. (EPA: STDM ) to “sector perform” from “outperform,” reflecting a more balanced outlook on the company’s performance, in a note dated Wednesday.
This downgrade indicates that RBC expects Sartorius Stedim’s returns to align with the sector average over the next 12 months, as opposed to significantly outperforming the sector.
Sartorius Stedim, specializing in equipment and consumables for biopharma and CDMOs, derives about 25% of its sales from equipment and 75% from consumables, including bioreactors, chromatography columns, and filtration products.
While listed in France, Sartorius AG (ETR: SATG ), a German company, owns 71.5% of Sartorius Stedim.
A key factor in the downgrade is the company’s performance in its recent employee engagement survey, which RBC highlights as a potential operational risk. The company’s reliance on its workforce makes this a critical concern.
RBC’s new price target for Sartorius Stedim is €240 per share, based on a multiple of 21x its estimated 2027 EBITDA.
This reflects a more conservative valuation compared to the premium observed over the past two years.
Risks to the rating and price target include the uncertain timing of market recovery, driven by macroeconomic concerns such as U.S. trade policy, biotech funding, and geopolitical instability, particularly in China.
Additionally, investor sentiment regarding Sartorius’ market insights, following multiple downgrades in 2023 and 2024, remains a concern.
Currency fluctuations, particularly a strengthening Euro, and potential U.S. tariffs pose further challenges to revenue and margins.