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William Blair Initiates Coverage of Bio-Techne With Outperform Rating

NEW YORK – William Blair announced on Monday that it has initiated coverage of Bio-Techne with an Outperform rating on the company's stock.

In a note to investors, analyst Matt Larew said that the company is positioned in multiple high-growth and attractive end markets, including cell and gene therapy, spatial biology, and liquid biopsy. He noted that Bio-Techne's eventual ownership of Wilson Wolf, expected in 2027, would allow it to take share in the cell and gene therapy market and "is worth $275 million in enterprise value to the stock today."

Larew also said that the Minneapolis-based company's spatial biology franchise is "an underappreciated piece of the story" because it is growing in the double-digit percent range and is already profitable. 

He cited the firm's "best-in-class" capital allocation record, as the company has deployed more than $1.9 billion for 18 acquisitions in the past decade and expanded its total addressable market from $6 billion to more than $24 billion. "Management has a track record of identifying high-quality assets in emerging spaces and acquiring them early in their adoption life cycle," he said.

Potential risk factors include the diverse competitive landscape across the life sciences industry that ranges from small niche players to large multinational corporations, as well as the fact that Bio-Techne's M&A success depends on competition, valuation multiples, and integration. In addition, the company's global customer base "presents currency, logistics, and [intellectual property] concerns," Larew said.

Funding concerns could also be a risk factor for the company, he added. Because much of Bio-Techne's revenue comes from early-stage biotechnology companies, a prolonged downturn in funding for those firms could hurt the growth prospects for multiple Bio-Techne franchises. Similarly, cutbacks in government funding for life sciences research would impact the academic market, which made up 22 percent of Bio-Techne's 2022 revenues, Larew said.

In early Tuesday morning trading on the Nasdaq, Bio-Techne's shares were up 1 percent to $79.01.