On Tuesday, Baird upgraded Livanova stock, a company listed on NASDAQ under the ticker LIVN, changing the rating from Neutral to Outperform. Accompanying this upgrade, the firm also increased the price target for Livanova's stock to $66.00, up from the previous target of $55.00.
The upgrade followed a recent presentation by Livanova's management at the Baird Conference, where they outlined the company's growth drivers for fiscal year 2025 and beyond. These growth levers are expected to contribute to a clear revenue upside over the coming years, according to the firm.
Despite the positive outlook on revenue, Livanova is anticipated to face earnings per share (EPS) headwinds due to the likely payout related to the SNIA agreement. This payout is seen as a potential neutral-to-downside risk for the company's CNS EPS figures in the out-years.
However, Baird noted that even with near-Street-low EPS estimates that assume the payout, the risk/reward balance for Livanova is tilted toward the upside. This is due to increased clarity in the company's long-term growth prospects, which is expected to lead to multiple expansion—a metric used to value a company by comparing its stock price to its earnings.
The firm's confidence in Livanova's growth visibility has effectively countered the last remaining concern from their previously neutral stance. With the new insights into the company's potential, Baird sees a defendable path for the stock's value to increase.
In other recent news, LivaNova (NASDAQ:LIVN) PLC has reported a 10% revenue increase in the second quarter of 2024, marking its sixth consecutive quarter of double-digit growth. This strong performance, particularly in its cardiopulmonary and epilepsy segments, has led the company to raise its full-year revenue and adjusted earnings per share (EPS) guidance for 2024. The adjusted operating income for the quarter was $67 million, up from $49 million the previous year, with the margin increasing from 17% to 21%.
In addition to these financial highlights, LivaNova announced the upcoming departure of its Chief Human Resources Officer, Trui Hebbelinck, effective September 30, 2024. The company is now actively seeking a replacement with the help of an external search firm. Hebbelinck's departure follows the terms of her existing service agreement, which includes a 12-month notice period and a period of garden leave.
These are recent developments and part of the company's strategic plans to invest in its core businesses to maintain above-market growth and accelerate innovation. LivaNova also anticipates higher operating expenses in the latter half of 2024 to support this growth and innovation. The company is awaiting a decision from the Centers for Medicare & Medicaid Services before engaging in commercial activities.
InvestingPro Insights
In light of Baird's upgrade of Livanova, recent data from InvestingPro provides additional context for investors considering the company's stock. As of the last twelve months leading up to Q2 2024, Livanova has reported a revenue growth of 11.52%, signifying a positive trend in the company's earnings capabilities. The gross profit margin stands at an impressive 67.95%, which underscores the company's ability to maintain profitability in its operations.
InvestingPro Tips indicate that analysts predict Livanova will be profitable this year, which aligns with Baird's optimistic outlook. Additionally, the company's liquid assets exceed its short-term obligations, providing financial stability and the capacity to manage debt effectively. These insights are particularly relevant for investors, as they suggest a solid financial foundation that could support the company's growth ambitions. For those seeking further analysis, InvestingPro offers additional tips on Livanova that could help in making an informed investment decision.
With a market capitalization of $2.65 billion and an adjusted P/E ratio for the upcoming year at 18.41, Livanova's stock valuation reflects a potential for growth that may interest investors looking for opportunities in the healthcare technology sector. The company's stock price has also seen a recent uptick, with a 1-week total return of 3.28%, adding to the positive sentiment surrounding the stock. It's worth noting that Livanova does not pay a dividend, which could be a factor for income-focused investors to consider.
Investors can access a comprehensive list of InvestingPro Tips for Livanova at https://www.investing.com/pro/LIVN to gain deeper insights into the company's financial health and growth prospects.
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