UBS Warns of a Decline in DiaSorin Shares

UBS has issued a new analytical report announcing a downgrade of its rating on DiaSorin SpA shares from 'Neutral' to 'Sell', with a price target lowered from €66 to €55. The new target reflects a potential downside of up to 25% compared to the share's closing price of €76.58 on August 11, which was immediately reflected in trading, with the biotechnology company's shares falling by 3.2%. The bank believes that market expectations for growth in the immunodiagnostics and molecular diagnostics segments have significantly exceeded competitive realities, resulting in UBS's EBIT estimates being 4% to 6% lower than the average analyst forecast.

This negative outlook is primarily due to the anticipated slowdown in growth in the immunodiagnostics division, which accounts for approximately 70% of the company's revenue. UBS expects this sector to register a compound annual growth rate (CAGR) of only 4% through 2030, a performance at the lower end of the company's guidance and below the average analyst forecast of 5.5%. This slowdown is exacerbated by increased competition from Roche in key areas such as latent tuberculosis and Lyme disease testing, along with continued operational and market pressures in China.

As for the molecular diagnostics segment, which contributes approximately 20% of revenue, the bank projects a CAGR of 8%, a rate that falls short of market expectations, which anticipate growth in the early 2020s. The report, based on an analytical model of data from US physician laboratories, explained that the optimistic projections for the new Liaison Nes platform assume difficult-to-achieve requirements. To meet management's guidance, this real-time care platform would need to capture nearly half of the additional market demand by 2030, a scenario the bank considers unrealistic given the current competitive landscape.