Atoms to decay, profits to stay; INITIATE WITH BUY

EUZ shares have declined 28% over the past six months, despite no structural business deterioration. The recent underperformance appears like a valuation dislocation, not reflecting EUZ’s unique positioning at the heart of one of the most attractive growth segments in modern medicine: targeted radiopharmaceuticals.

Targeted radiopharmaceuticals are the next phase of cancer therapy, delivering radiation directly to tumour cells with higher precision and fewer side effects than conventional methods.

As a result, the market for nuclear medicine is expected to grow with a 17% CAGR into 2029e (source: MedRays). Growth is driven by expansion into earlier treatment lines, a broadening patient population, more indications and a global penetration.

Every radiopharmaceutical therapy ultimately depends on the reliable supply of radioisotopes, the core of EUZ’s business model. This “picks-and-shovels” positioning delivers structural growth with balanced risks, especially as EUZ has an isotope-agnostic offering, helping to diversify across drugs and customers. Moreover, EUZ sits at the knowledge and quality bottleneck of the supply chain, explaining EBIT margins in the high 20% for the radiopharmaceutical business.

Deep competitive moat built over decades: EUZ combines early-mover advantages, radiation-specific know-how and an integrated global footprint that is difficult to replicate. Long-standing customer relationships, regulatory approvals, qualified production sites and regulatory lock-in effects create high switching costs and tangible entry barriers. These advantages translate into consistently high ROCEs (16% on avg. 2021-27e), even as the company continues to invest in future growth capacity.

While EUZ’s radiopharma business (half of group sales) is set to grow in line with the market, legacy radiation-based activities are expected to remain stable. Combined with an increasingly favourable mix, this underpins an EPS CAGR of 17% over 2024–28e (eNuW).

All comes at a compelling valuation: 66% upside to peers on PER’26e and a 42% discount to its own historic 5-year PER (median: 34x, eNuW). This upside is underpinned by our DCF-derived PT of € 23.

While near-term results are unlikely to be a major catalyst, H1 26e should see several relevant study read-outs, providing meaningful support for the radiopharmaceutical investment case.

INITIATE with BUY, viewing EUZ as a rare high-quality, infrastructure-like compounder, benefiting from the rapid radiopharmaceutical market growth. - continued -