Evotec Shares Rally as Activist Investor Pushes for Biologics Spin-Off

Shares of German drug discovery firm Evotec SE have staged a remarkable recovery, surging nearly 37% over the past month to trade at €5.74. This rebound follows a brutal spring sell-off and has now propelled the stock above a key technical threshold: the 100-day moving average at €5.48. Market technicians view this breakout as a potential signal for a short-term trend reversal.

The rally unfolds against a backdrop of intense strategic pressure. Activist investor MAK Capital, led by Michael A. Kaufman, is agitating for radical change. The fund is pushing for an accelerated initial public offering of Evotec's US-based biologics subsidiary, Just – Evotec Biologics, arguing the unit alone could be worth over €1 billion. This figure starkly contrasts with the company's current total market capitalization of approximately €796 million, a valuation depressed by an 85% share price decline over the past five years.

Management is already executing its own sweeping transformation plan, declaring the current year a transitional phase. The company aims for 2026 revenues of up to €780 million, with an adjusted operating result projected to reach a maximum of €40 million. To achieve this, Evotec is drastically consolidating its global footprint, planning to reduce its sites to just ten over the next two years from nearly double that number previously. This consolidation is expected to eliminate up to 800 jobs.

Should investors sell immediately? Or is it worth buying Evotec?

Financially, early signs of progress are emerging. The company's net loss halved year-over-year, and a significant cash infusion is on the horizon. Evotec anticipates closing the sale of its Tubulis platform to Gilead Sciences in the second quarter, a deal expected to generate an upfront payment of $100 million plus additional milestone-dependent payments.

Analyst sentiment remains sharply divided, with price targets currently ranging from €4.50 to €9.70. However, some are responding positively to the strategic shift. HC Wainwright recently initiated coverage with a "Buy" rating and a €6.60 price target, citing advances in AI-driven drug discovery and initial efficiency gains from the new strategy.

The next major technical hurdle for the stock is the 200-day moving average at €5.85. A sustained break above this level would signal a potential halt to the longer-term downtrend. Fundamentally, much depends on the high-growth Just – Evotec Biologics division, which increased its revenue by 40% last year. Improving margins in this segment could eventually put the 52-week high of €8.32 back in sight.

Investors face several near-term catalysts. The company will report first-quarter figures on May 6. All eyes will then turn to the annual general meeting in June, where shareholders will vote on a new supervisory board chairman, with former Bayer executive Dieter Weinand nominated to succeed Iris Löw-Friedrich. MAK Capital has nominated its own candidate, Wolfgang Hofmann, for the board and is also demanding an extraordinary meeting of the supervisory board to press for faster cost reductions and measurable operational improvements by year-end.

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