On Friday, Haemonetics Corporation (NYSE:HAE) stock, a healthcare company specializing in blood management solutions, received an upgraded rating from Raymond (NS:RYMD) James, moving from Outperform to Strong Buy. Alongside the upgrade, the firm also increased the price target for Haemonetics to $120.00, signaling a positive outlook on the company's future performance.
The upgrade comes after Haemonetics reported its second-quarter financial results earlier in the week. The results prompted a positive market reaction, with the stock price climbing over 11%. Raymond James cited increased confidence in Haemonetics' ability to sustain double-digit earnings growth and a belief that the market is underestimating the company's assets.
The analyst noted that the second-quarter results dispelled concerns over the company's vascular closure business and highlighted that the target for high 20s adjusted EBIT margin by fiscal year 2026 appears more achievable than investors had previously realized. With the MVP XL product having a full quarter on the market in the third quarter and other favorable dynamics, the analyst expects further clarity on the company's financial health and margin improvements.
According to Raymond James, Haemonetics' profile as a double-digit earnings grower justifies a valuation multiple of at least 20 times earnings, which is still below many other medical technology companies with similar growth profiles. The firm also sees a potential for even higher valuation if management can meet its margin targets, which are not yet fully reflected in Raymond James' model, as well as the possibility for additional upside in the company's financials.
In other recent news, Haemonetics Corporation reported noteworthy financial performance, surpassing consensus expectations for both revenue and earnings per share in the second quarter of fiscal year 2025. The company continued to uphold its full-year fiscal 2025 revenue and earnings per share outlook. Haemonetics also reported a 10% organic revenue increase in Q4 and a 12% rise for the fiscal year.
In addition, the company recently upsized its private offering to $600 million in convertible senior notes, exceeding the initially proposed $525 million. Haemonetics also announced the departure of its Executive Vice President and Chief Technology Officer, Anila Lingamneni, effective November 1, 2024.
In terms of product development, Haemonetics launched the VASCADE MVP XL venous closure system and gained CE Mark certification for its SavvyWire® Pre-Shaped Pressure Guidewire (NYSE:GWRE). These developments allow for product introduction to the European Union and other regions recognizing the CE Mark.
On the analyst front, BofA Securities and BTIG initiated coverage on Haemonetics with a Neutral and Buy rating, respectively. Needham reaffirmed its positive stance on Haemonetics, maintaining a Buy rating and a price target of $112.00, based on the company's projected ability to achieve a high operating margin target for fiscal year 2026.
InvestingPro Insights
The recent upgrade by Raymond James aligns with several key metrics and insights from InvestingPro. Haemonetics Corporation (NYSE:HAE) has shown significant momentum, with InvestingPro data revealing a 21.05% return over the last week and a strong 12.85% return over the last month. This recent performance supports Raymond James' optimistic outlook on the stock.
InvestingPro Tips highlight that Haemonetics has been profitable over the last twelve months, and analysts predict the company will remain profitable this year. This profitability trend aligns with Raymond James' confidence in the company's sustained double-digit earnings growth potential.
Additionally, an InvestingPro Tip indicates that Haemonetics' cash flows can sufficiently cover interest payments, suggesting financial stability. This factor may contribute to the achievability of the high 20s adjusted EBIT margin target mentioned by Raymond James.
It's worth noting that InvestingPro offers 8 additional tips for Haemonetics, providing investors with a more comprehensive analysis of the company's financial health and market position.
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