What will now be crucial for Desert Gold, Draegerwerk and Verbio

Drägerwerk: Growth with weak earnings quality

The ordinary share of Drägerwerk AG & Co. KGaA came under heavy selling pressure as early as last Thursday. The stock lost as much as 18.26% within a single day and closed at EUR 73.40. The sell-off continued until yesterday, Wednesday, when the stock hit a low of EUR 69.40 before initial buying pushed the price back towards EUR 72.20. Investors were caught off guard after a strong share price rise that had been underway since May. Preliminary quarterly figures triggered the move, with the quality of earnings in particular raising questions.

The Lübeck-based group develops medical and safety technology. Its offering includes ventilators and anaesthesia machines, patient monitors, as well as respiratory protection and gas detection technology. Its customers include hospitals, fire brigades and industrial companies. This broad business provides different sources of demand. For the stock market, however, the decisive factor remains how much profit remains after production, personnel and development costs. 

In the third quarter, revenue increased by 2.1% in nominal terms to around EUR 851 million. Earnings before interest and taxes, by contrast, fell from EUR 56.7 million to approximately EUR 48 million. The EBIT margin fell from 6.8 to 5.6%. Particularly notable were tariff refunds of EUR 20.1 million included in the figures. Despite this support, earnings remained below the previous year's level. Dräger pointed to a disproportionate increase in functional costs alongside slower revenue growth. This contrasted sharply with the first half of the year. At that time, preliminary calculations showed revenue rose 7.7% on a currency-adjusted basis to around EUR 1,603 million. EBIT had more than tripled to approximately EUR 64 million. At the same time, the increase in costs had remained well below revenue growth. This comparison highlights precisely why the latest quarter may have fallen short of the elevated expectations.

Order trends nevertheless provided positive indications. In the third quarter, orders rose by 7% on a currency-adjusted basis to around EUR 926 million. While safety technology grew strongly, medical technology declined. The group confirmed its full-year forecast for currency-adjusted revenue growth of 2 to 6% and an EBIT margin of 6 to 8%. The full quarterly report is scheduled for October 29.

From a technical perspective, the price plunge left clear marks. With the decline to EUR 72.20, the share slipped below all major moving averages. The break below the 200-day moving average at around EUR 75.20 is particularly significant. This level now represents the first hurdle to be reclaimed. Above it are the 100-day moving average at EUR 79.80 and the psychologically important threshold of EUR 80. A recovery would need to overcome this zone sustainably to improve the damaged technical picture. The 50-day moving average is even higher, at approximately EUR 84.80. On the downside, the previous lows around EUR 68 to EUR 70 are emerging as a support zone, which at least fulfilled its function in yesterday's trading. A rapid rebound such as Wednesday's alone would therefore not yet be convincing evidence of a lasting trend reversal.

Desert Gold: From explorer to gold producer

Desert Gold Ventures is driving forward its transformation from a pure resource explorer to a resource producer. For the flagship SMSZ project in western Mali, near the border with Senegal, the timetable remains ambitious: the plant is due to be commissioned operationally by the end of October. After that, initial ore processing is set to start as early as November, aiming for the first commercial gold pour by the end of the fourth quarter of 2026.

For this purpose, a gravity-based processing plant with a daily capacity of 200 tonnes and a 650-kVA generator have already arrived at the Barani site. Previously, sea freight, regional fuel shortages and the rainy season had delayed the timetable by three to four months. However, the final assembly of the mechanical and electrical components, delayed as a result, is now imminent, and the company will announce it in an ad hoc disclosure within the next two weeks.

The company is deliberately financing initial operations at the Barani East open-pit mine on a lean basis, without debt, royalty payments or forward sales, as CEO Jared Scharf emphasises. The small-scale open-pit mining licence limits the maximum throughput currently permitted to 1,200 tonnes per day. Management estimates around USD 15 million for a subsequent expansion to include carbon-in-leach (CIL) processing and is examining forward sales, offtake agreements or debt financing for this purpose to keep shareholder dilution as low as possible.

The forthcoming daily throughput and the actual gold recovery from the ore-bearing material to be leached are now what matters for the share's re-rating. Analysts Greiffenberger and Filker from GBC rate the share a Buy and set a price target of EUR 0.59 (CAD 0.93), provided the company can implement its plans as envisaged. At a current share price of around EUR 0.083 (CAD 0.125), the upside potential is well over 700% over the next few quarters.

Verbio: Share price surge following buy recommendation – key resistance zone ahead

Verbio SE shares were among the most notable gainers on the German stock market last Friday. From the previous day's closing price of EUR 25.60, the stock rose to EUR 29.84. This represented a daily gain of 16.56%. The catalyst was a more optimistic assessment by Jefferies. However, after the sharp rise, a technical zone came into view that could prove decisive for further developments but prompted short-term profit-taking. 

The research firm upgraded Verbio from Hold to Buy and raised its price target from EUR 36 to EUR 42. Analyst Constantin Hesse based his optimism particularly on brighter earnings prospects in the biodiesel business. In his assessment, production margins were above previous expectations. An expected tightening of the market could further support profitability. The new price target was around 41% above Friday's closing price. At the same time, Jefferies pointed to the extensive investment programme, which was almost complete. This increasingly shifted focus to what returns Verbio could generate from the production capacity it had built up. After years of expansion, more optimal capacity utilisation, higher cash inflows and the economic use of existing facilities gained importance.

The latest published financial results already provided an improved starting point for this. In the 2025/26 financial year, Verbio increased revenue by 18.5% to EUR 1,872.7 million. EBITDA rose from EUR 14.2 million to EUR 193.9 million, exceeding the previously raised forecast of EUR 160 to 180 million. At the same time, net financial debt fell to around EUR 92 million. For 2026/27, the Management Board indicated EBITDA of between EUR 210 and 250 million. Higher production volumes in North America, more biomethane and additional contributions from the greenhouse gas quota business were expected to drive the increase.

From a technical perspective, the short-term picture has not yet improved following the initial rejection at the resistance zone of EUR 29.70 to EUR 31.70. The 50-day moving average stands at around EUR 29.70, the 100-day at around EUR 30.30, and the 200-day at approximately EUR 31.70, forming resistance levels. Since mid-June, the area between approximately EUR 30 and EUR 34 has repeatedly served as a trading zone. Previous support levels could now act as resistance after being breached to the downside. For the recovery to continue, it would therefore be crucial to sustainably reclaim the EUR 30 level and defend it during subsequent pullbacks.

Above EUR 31.70, the upper boundary of the previous trading range at around EUR 34 could then come into focus. If, on the other hand, the share failed at the resistance zone, profit-taking following the strong daily rise would be understandable. The EUR 27 level would likely be the initial support area. The Buy recommendation provided strong momentum; however, confirmation of a sustainable technical reversal is still pending.

Conclusion

Drägerwerk recorded revenue growth in the third quarter, but EBIT and the margin fell despite tariff refunds. Following the share price slide, cost developments and the EUR 75 level remain crucial. Desert Gold is approaching its first gold production in Mali, bringing actual throughput, gold recovery rates and the financing of the ramp-up and expansion increasingly into focus for investors. Verbio significantly increased revenue and EBITDA and received a boost from Jefferies. For a sustainable recovery, however, the resistance zone between EUR 29.70 and EUR 31.70 must be overcome.