Upgraded on healthy cash flows post acquisition

Evotec ended 2016 with the landmark deal with Celgene for Evotec’s induced pluripotent stem cell (iPSC) platform, bringing in a $45m upfront payment. Other recent highlights were Novo A/S’ €90.3m investment in the company and the acquisition of Cyprotex, an ADME-Tox and DMPK specialist that will enhance Evotec’s core service offering and also add new clients. Evotec’s Q316 results were solid, with better-than-expected margins being the main surprise for us, which prompted us to upgrade our forecasts and raise our valuation to €1.2bn.