Friday, Wolfe Research initiated coverage on shares of Stevanato Group S.p.A. (NYSE:STVN), a $6.16 billion market cap company, with an Outperform rating and a price target of $28.00. The firm highlighted the company's potential to resume double-digit revenue growth from its current 3.53% pace as it supplies critical components and solutions to the biopharmaceutical industry. According to InvestingPro data, analyst targets for the stock range from $21 to $37.
Stevanato Group has recently encountered both industry-wide headwinds, such as destocking, and some challenges of its own making. Despite these issues, Wolfe Research anticipates that the company is nearing a significant turnaround, supported by a strong 9.72% stock price gain over the past week.
The firm's analysts project that Stevanato's revenue growth will reach high single-digit levels throughout the course of 2025, with adjusted EBITDA margins returning to the mid-20s percentage range. InvestingPro subscribers have access to 8 additional key insights about STVN's growth prospects and valuation metrics.
The analysis further suggests that Stevanato's margin improvement will be driven by both growth and a favorable mix of business. Moreover, the firm expects that Stevanato's free cash flow (FCF) will see enhancement over the coming years as capital expenditure investments stabilize.
Wolfe Research's outlook is also underpinned by the current valuation of Stevanato's shares, which are trading at less than 20 times the firm's estimated earnings for 2025 and approximately 16 times those for 2026. The price target of $28.00 is based on roughly 20 times the estimated 2026 EBITDA, indicating a positive forecast for the stock's performance.
In other recent news, Stevanato Group S.p.A., a provider of drug containment, delivery, and diagnostic solutions, reported a modest revenue increase for the third quarter of 2024, with revenues reaching €277.9 million, a 2% growth year-over-year. This growth was primarily driven by its Biopharmaceutical and Diagnostic Solutions Segment.
Despite challenges in the Engineering Segment, the company maintains its 2024 revenue guidance between €1.090 billion to €1.110 billion. Morgan Stanley (NYSE:MS) initiated coverage on shares of Stevanato Group with an Equalweight rating and a price target of $23.00, highlighting its potential to capitalize on double-digit growth in biologics.
However, the firm also pointed out some near-term challenges such as vial destocking, costs not fully absorbed due to necessary expansion of production capacity, and expenses related to engineering and optimization efforts.
Stevanato Group anticipates a gradual recovery in vial orders starting late 2024 and is implementing a business optimization plan, particularly in the Engineering Segment. The Fishers facility began commercial production, and the Latina facility turned profitable at the gross profit level, which are among the recent developments expected to drive future growth.
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