HelloFresh, Royal Helium, Evotec - Rebounds in sight

HelloFresh - Stock market crash following revision of earnings expectations

HelloFresh's share price fell by a substantial 45% after the Company revised its financial targets for 2025 downwards to EUR 10 billion in sales and EUR 1 billion in EBITDA. This move raised concern among investors, leading to substantial sell-offs and marking the largest share price decline in the Company's history. Analysts saw this revision as further evidence of the challenges facing the Company, especially after previous forecast adjustments. The Company saw substantial growth during the COVID-19 era, with the stock reaching over EUR 95 at its peak. Since then, it has been on a downward trend.

Sales for 2023 are expected to be around EUR 7.6 billion, similar to the previous year. The adjusted EBITDA is projected to be EUR 448 million, compared to EUR 477 million in the previous year. While these figures align with forecasts, they fall short of representing significant growth. The Company is now forecasting an adjusted operating profit of EUR 350 to 400 million for 2024. These new targets are significantly lower than the previous assumptions. One of the reasons could be the delay in the expansion of a production facility in the US. With the "Ready-to-Eat" brand, the Company wanted to establish a second mainstay in the Ready-to-Eat segment, which is a growing segment for the Company.

However, the demand for pre-portioned meal kits is declining. New customers are only attracted by heavy discounts. The Company is faced with the task of consolidating its core business while effectively developing new growth areas. While management grapples with these strategic issues, it remains to be seen how HelloFresh can strengthen its position in the market and regain investor confidence. However, the sharp fall in the share price could present the Company as an interesting takeover candidate. The share is currently trading at EUR 7.13, giving it a market capitalization of just under EUR 1.2 billion.

Royal Helium - Announces company update

At the end of 2023, the explorer Royal Helium evolved into a producer of industrial gas. While this transformation may not yet be evident from the figures to date, it is expected to change with the announcement of the figures for the first quarter. The Company, with extensive licenses and lease agreements covering over 1 million hectares in South Saskatchewan and Southeast Alberta, spread across more than 15 potential helium fields, holds significant growth opportunities in a globally undersupplied market. Due to the critical nature of this resource, the Canadian government is supporting the Company with a CAD 3 million interest-free loan to facilitate further upgrades to the Steveville helium processing facility in Alberta.

On February 28, the Company announced its development plans for its four key exploration projects. Royal Helium is focusing its development activities on the completion and testing of existing wells in the Val Marie, Ogema and Steveville areas and the drilling of new wells on the 40-Mile project in Alberta. First, there is the Val Marie project, which covers 13,000 hectares and has the highest helium levels ever recorded by the Company in the initial drill hole. The Ogema property spans 27,000 hectares and has two drill holes completed so far. The 40-Mile project covers approximately 3,100 hectares and features a historically high-grade helium well. Following the drilling results, the Company intends to decide on the next location for processing.

The experience gained from the Steveville production facility provides a proof of concept and will enable the next facility to be implemented more quickly. A potential untapped zone has been identified in Steveville and will now be tested. If the results are positive, the life of the Steveville project could be increased by 33%. With a third well, a production buffer could be created so that production could be maintained at 100% should maintenance work be required on one of the other two producing wells. The share has yet to price in the good news flow and is trading at CAD 0.175.

Evotec - No turnaround yet, despite the good news

After the surprising resignation of the then-CEO Werner Lanthaler, Evotec's share price plummeted and has not recovered. The situation was explained in more detail in a conference call. Lanthaler had asked the Supervisory Board to terminate his employment contract at the end of 2023. The Supervisory Board complied with this on January 3. At the same time, Lanthaler disclosed a series of insider transactions, which the Company reported immediately. The Company then reviewed its processes in this regard. Mr. Lanthaler will no longer be involved in any of the Company's activities.

Evotec is focusing on strategic partnerships, such as a collaboration with Claris Ventures. Companies in Claris' portfolio benefit from easy access to Evotec's extensive pre-clinical, clinical development, and manufacturing capabilities. This agreement builds on a previously successful collaboration between Evotec and IAMA, a company in Claris' portfolio. Just-Evotec Biologics and Advanced BioScience Laboratories are expanding their collaboration to develop innovative therapies against HIV.

Despite these positive developments and supportive analyst ratings, the Company's shares remain under pressure. The investment community awaits tangible progress and a worthy successor to Lanthaler as Evotec seeks to regain its confidence and consolidate its position in the biotech industry. After all, the short sellers have largely exited the stock, which is a positive sign. The share has been forming a bottom around EUR 12.70 and EUR 13.00 for a few days. The share is currently trading at EUR 13.07.

Each of the three candidates has the opportunity to turn things around. HelloFresh has an operationally positive business, a claim not many online companies can make. A possible takeover could provide a boost. Royal Helium is now a helium producer and can turn other gases from extraction into money. The public is likely to take notice after the first-quarter figures. Evotec has only been dragged down by the departure of the CEO. Operationally the Company is making good progress. A turnaround is likely only a matter of time.