On Tuesday, Morgan Stanley (NYSE:MS) shifted its stance on Fresenius SE & Co (OTC:FSNUY) KGaA (FRE:GR) (OTC: FSNUY), upgrading the stock from Equalweight to Overweight and lifting the price target to €39.00 from €34.00. The upgrade reflects the firm's optimism about the healthcare company's earnings potential and stock performance.
Morgan Stanley's revised forecast for Fresenius SE (ETR:FREG) includes an increase in the earnings per share (EPS) estimates for the fiscal years 2024, 2025, and 2026 by 1%, 5%, and 6%, respectively. The new price target suggests a 30% potential upside for the stock, positioning Fresenius SE at the forefront of Morgan Stanley's risk-reward analysis.
The analyst highlighted the company's recent strategic moves, pointing out the importance of the portfolio simplification program carried out by Fresenius SE management over the past two years.
This program is seen as a critical factor, especially with the deconsolidation of Fresenius Medical Care (NYSE:FMS) (FME), which was completed in November 2023, and the planned exit from Vamed, announced in May 2024.
The analyst believes that the remaining divisions of Fresenius SE, namely Kabi and Helios, represent the more robust segments of the business. These divisions have demonstrated higher growth and margins from 2018 to 2022, which could support an improvement in the company's operational performance going forward.
Investors are now watching Fresenius SE as it continues to streamline its operations, with the focus on its core businesses that are expected to drive future growth and profitability. The stock's upgrade is a sign of confidence from Morgan Stanley in the company's strategic direction and its potential for enhanced shareholder value.
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