Genovis reported sales of SEK27.9m (-17% vs REe, +21% y/y if adjusted for fx and the QED divestment). The gross margin aligned with estimates at 88% and EBIT came in at SEK5.3m (-43% vs REe, 19% margin). All in all, the report demonstrates continued solid growth in the enzyme business with expanding profitability. However, it fell short of our estimates in terms of both sales and EBIT, as we had anticipated a stronger performance based on expectations of more robust underlying end-market demand.

We lower our FY 2025 and 2026 sales estimates by ~15% and EBIT estimates by 20%, adopting a more cautious stance until we see growth from the divested antibody business regained by the enzyme business. 2024 presented challenges in the life science tools market, with customer inventory destocking and reduced biotech funding creating headwinds—an outlook confirmed by larger industry players such as Sartorius. However, the outlook for 2025 appears more favorable, and Genovis seems well-positioned to sustain its growth trajectory while expanding margins. The company expects only a marginal increase in its cost base throughout 2025.

We slightly lower our base case from SEK53 to SEK49, with our bull and bear cases at SEK100 (104) and SEK23 (24), respectively. While Genovis' valuation has remained under pressure due to the lack of expected optionality materializing in recent years, the analytics business has continued to deliver solid growth and expanding profitability despite headwinds in the underlying market. Notably, the share has traded near our bear case for the past few months, with limited progress priced in the stock beyond the enzyme analytics business. Xork dialogues are ongoing with interested parties according to the year-end report, and any progress on that front is likely to reignite sentiment.