On Wednesday, Needham upgraded Haemonetics (NYSE:HAE) stock from Hold to Buy, setting a price target of $112.00. The firm's revised outlook is based on a mix analysis that increased confidence in the company's ability to meet its "high-20%" operating margin target for fiscal year 2026.
The upgrade stems from two key factors that are expected to drive Haemonetics' gross margin: a decrease in lower-margin Plasma sales to CSL (OTC:CSLLY) and an increase in higher-margin Interventional Technologies sales. Needham believes that the impact of reduced Plasma sales is manageable and has already been accounted for in the consensus estimates.
The firm's analysis suggests that Haemonetics' shares are currently undervalued, attributing this to the market's skepticism regarding the company's fiscal year 2026 margin target and the consensus earnings per share (EPS) estimate. Needham anticipates that as the company demonstrates progress towards its FY26 goals in its quarterly results, there will be an expansion in its market multiples.
The positive outlook on Haemonetics is based on the firm's expectation that the company will prove its ability to achieve its long-term financial targets, leading to a reassessment of the stock's value by the market. The new price target of $112 represents a significant potential upside from the stock's previous hold rating.
In other recent news, Haemonetics Corporation has increased its private offering to $600 million in convertible senior notes, a significant rise from the initially proposed $525 million. The notes, due in 2029, are targeted towards qualified institutional buyers and are expected to close soon.
The company has also granted initial purchasers a 13-day option to buy up to an additional $100 million principal amount of notes, potentially bringing the total offering to $700 million. The net proceeds, estimated at approximately $584.8 million or $682.3 million if the additional notes are purchased, will be used for various corporate purposes.
In other developments, Haemonetics has announced robust results for its fourth-quarter and full fiscal year 2024, showcasing organic revenue growth and a positive outlook for the upcoming year.
The company reported a 10% organic revenue increase in Q4 and a 12% rise for the fiscal year. For fiscal year 2025, Haemonetics provided revenue guidance, with expectations of growth across its core plasma and hospital business units, and a projected decline in its blood center business.
Meanwhile, Hafnia Limited's Q1 earnings per share fell slightly short of analyst expectations, reporting a Q1 EPS of $0.43, which was $0.01 below the analyst estimate. However, Hafnia's revenue for the quarter was robust, significantly surpassing the consensus estimate.
InvestingPro Insights
With Needham's recent upgrade of Haemonetics (NYSE:HAE) to a Buy rating and a new price target of $112.00, investors may find additional perspective from real-time data and InvestingPro Tips. Haemonetics is currently trading at a high earnings multiple with a P/E ratio of 36.17, which suggests optimism about the company's future earnings potential. Additionally, the company's ability to manage debts and liquidity appears robust, as cash flows can sufficiently cover interest payments and liquid assets exceed short-term obligations.
InvestingPro Tips highlight that analysts have revised their earnings downwards for the upcoming period, which may warrant caution. Yet, the stock generally trades with low price volatility, providing some stability for investors. For those interested in further analysis, additional InvestingPro Tips related to Haemonetics can be found at https://www.investing.com/pro/HAE. There are 6 more tips available, which can give investors a more comprehensive understanding of the stock's potential. Remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
InvestingPro Data provides a snapshot of the company's financial health. Haemonetics has a market capitalization of $4.25 billion and has shown a revenue growth of 12.01% in the last twelve months as of Q4 2024, indicating a steady increase in the company's business. The gross profit margin stands at a healthy 54.38%, reflecting efficient cost management and a strong pricing strategy.
Overall, these insights can help investors understand the underlying financial metrics that support Needham's optimistic outlook on Haemonetics, complementing the analysis provided in the article.
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