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May 8th, 2024 | 06:45 CEST

BUY RECOMMENDATIONS! Are Evotec, Super Micro Computer, and Royal Helium about to take off?

  • Mining
  • Helium
  • AI
  • Biotechnology
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Evotec's share price has plummeted by around 50% this year. Consequently, the stock is among the year's losers. However, several buy recommendations are raising eyebrows. Is the turnaround imminent? The Royal Helium share is also ripe for a turnaround. The little-known noble gas is used in the defense industry, medical technology and for quantum computers, among other things. Royal Helium aims to transition from an explorer into a producer and has enlisted strong partners to achieve this. Will the share see a breakthrough after the ongoing capital increase? And what about Super Micro Computer? The AI high-flyer seems to have overcome its phase of weakness. Is it now heading for new all-time highs?

time to read: 3 minutes | Author: Fabian Lorenz
ISIN: EVOTEC SE INH O.N. | DE0005664809 , SUPER MICRO COMPUT.DL-_01 | US86800U1043 , ROYAL HELIUM LTD. | CA78029U2056

Table of contents:

    Royal Helium with an exciting new joint venture

    The situation at Royal Helium is currently attractive. After the share price has more than halved in the past six months, the chances of a turnaround are currently good. On the one hand, the Company has recently taken an important step on its path from explorer to producer of helium. On the other hand, the share is now trading at the level of the current capital increase. Once this is completed, the share can also take off again. This is because the fundamental environment for helium is excellent as the noble gas is needed in the semiconductor and defense industries, medical technology, and for cooling quantum computers, among other things.

    Royal Helium is among the few "pure plays" on the stock market. The first wells were brought into production in 2023, and more are to follow this year. The Canadians recently announced a cooperation with Sparrow Hawk Developments Ltd. The plan is to jointly develop Royal Helium's Val Marie helium project. Royal Helium will contribute land in the Canadian province of Saskatchewan to the joint venture, and Sparrow Hawk will provide CAD 25 million for the development.

    Royal Helium CEO Andrew Davidson: "This joint venture represents an exciting next step in Royal's mission to advance the development of its extensive helium resources and bring additional assets on stream each year." The aim is to market helium worldwide jointly.

    To learn more about Royal Helium, we advise watching the recording of the CEO's presentation from the 11th IIF investor (conference).

    Evotec: What are the medium-term plans?

    Investors are also waiting for a turnaround in Evotec shares. The German biotech veteran's shares are among the current year's biggest losers. Initially, the Company shocked investors with undisclosed director dealings by the outgoing CEO. Most recently, the outlook for the current year also fell short of expectations. At least a new CEO has been found in Christian Wojzewski. He will take the helm on July 1 and has already announced a realignment of the biotech company. Investors and analysts are now eagerly awaiting details.

    The current analyst recommendations raise hopes that the share has bottomed out. Although the price targets have been trimmed, they are often well above the current level of just under EUR 10. Warburg Research, for example, has maintained its "Buy" rating. However, the analysts have reduced the price target from EUR 25 to EUR 18 for the time being but have also made it clear that it will take time to regain lost investor confidence. First, it must be clear what the Company's realignment will look like in concrete terms. RBC still believes that the Evotec share is worth EUR 16 - reduced from EUR 18.60. Details on the expected medium-term planning are not expected until August. The analysts have, therefore, reduced their forecasts for the biotech company for the time being. The recommendation remains "Outperform".

    Deutsche Bank is more pessimistic. Although the analysts are confident that Evotec can grow profitably in the future and that the reaction of investors to the surprising realignment was exaggerated, the price target has been reduced from EUR 19 to EUR 12.

    Super Micro Computer benefits from Nvidia forecast

    AI shares appear to have already ended their consolidation. After Nvidia's share price had already risen more sharply, Super Micro Computer has also been heading north recently. Although there was no new news from the Company itself, it is likely to benefit from a euphoric forecast from its partner, Nvidia. Analysts at Mizuho believe that Nvidia will generate a whopping USD 280 billion in sales in 2027, which would be around 500% more than the USD 47.5 billion expected by Mizuho for 2024. Nvidia remains the undisputed leader in AI chips, with a market share of over 90%. This will not change in the foreseeable future.

    Super Micro Computer should also benefit from this massive growth. After all, the Company specializes in the construction of data centers, and the CEOs of the two companies have a friendship. Incidentally, Mizuho's price target for the Nvidia share is a proud USD 1,000.

    So, AI stocks are gaining momentum again. Super Micro should benefit from this, even though the valuation at a market capitalization of nearly USD 50 billion is quite ambitious. In contrast, Royal Helium only has a market capitalization of around CAD 23 million and could become a serious helium producer in the current year. There are still many question marks surrounding Evotec. Only when the future strategy and medium-term planning have been published should a sustained increase in the share price be possible.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Fabian Lorenz

    For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.

    About the author

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