While Evotec’s latest profit warning has sent the stock tumbling to within a whisker of its 52-week low, a less noticed bright spot is flickering in the background. The company’s base discovery and preclinical development business – the engine room of its day-to-day operations – posted a 28% jump in net sales during the first half, fuelled by rising capacity utilisation at the Evotec Biologics arm and an expanding client base. That surge stands in stark contrast to the headline figures that have rattled investors.
On Wednesday, management slashed its 2026 revenue guidance from a range of €700 million to €780 million down to just €570 million to €610 million. Far more jarring is the swing in profitability: the previously targeted operating profit of up to €40 million has been replaced by an adjusted EBITDA loss of between €70 million and €105 million. The company attributes roughly 40% of the gap to deferred milestone payments from existing partnerships, 45% to delays in newly negotiated collaborations, and the remaining 15% to lower revenue recognition.
The market reaction has been brutal. Shares closed at €3.46, shedding 8.41% in a single session and extending the seven-day rout to 28.85%. At one point earlier in the week the stock had dropped 22% in as many trading days, before further selling drove the relative strength index down to 21.1 – deep into oversold territory. The price now sits barely above the 52-week low of €3.19 set on July 14, and trades 36% below its 200-day moving average of €5.41.
Should investors sell immediately? Or is it worth buying Evotec?
The severity of the warning has split the analyst community. RBC Capital Markets stuck with an “Outperform” rating and a €10 price target, arguing that the core business is gaining traction. Analyst Charles Weston acknowledged that the move constitutes a “significant profit warning” and that Evotec has squandered credibility on expectations management, but he believes the partnership revenue is merely postponed, not lost. Deutsche Bank took the opposite view, reaffirming a “Hold” rating and a €4.50 target, pointing to the magnitude of the miss as a reason to stay cautious. TD Cowen also retained its “Hold” stance but halved its price target to $2, underscoring the uncertainty around the timing of milestone receipts.
To stem the cash burn, Evotec has launched a sweeping restructuring that will eliminate up to 800 positions and close several sites. The programme is expected to cost around €100 million between 2026 and 2028 but is designed to improve the cost base by €75 million by the end of 2027, with 20% to 30% of that benefit targeted for this year. The challenge is that the restructuring costs compound the EBITDA loss, putting further strain on a balance sheet that still held €465.6 million in liquidity at the end of June.
The next inflection point arrives on August 13, when Evotec releases its full second‑quarter results. The preliminary half‑year numbers already show revenue of €300.1 million and an adjusted EBITDA loss of €42.7 million. Investors will be watching closely for signs that the deferred milestone payments are being recovered and whether the restructuring is on track. Until then, the stock looks boxed in: a sustainable rally needs either a tangible catalyst from the partnership pipeline or visible progress on cost savings, while further downside remains possible if the next report reveals additional impairments or deeper cash erosion.
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