On Monday, Evercore ISI updated its financial outlook on Revvity Inc (NYSE:RVTY), raising the stock's price target from $132.00 to $134.00 while maintaining an Outperform rating. The adjustment follows Revvity's announcement of a 2% organic growth, slightly above the standard expectations, and an approximate 8% year-over-year increase in EPS.
This growth was attributed to gross margin expansion and lower tax and net interest expenses. Despite a reduction in the FY24 organic growth outlook by 150 basis points to a range of 0-1%, Revvity's shares saw a 3% increase.
Revvity has also carried forward a third-quarter EPS beat and raised the FY24 EPS estimate, even though revenue projections were lowered by roughly $20 million. The management's guidance adjustment primarily concerns the Instruments & Applied Genomics sectors, which make up about 20% of revenues.
The revised guidance reflects an expected decline in Instruments and a flat to downward trend in Applied Genomics for the fourth quarter. This is in line with industry peers who anticipate similar growth rates for the same period.
The company's key growth areas, including Reproductive Health, ImmunoDiagnostics, and Reagents, which together represent approximately 72-74% of revenues, have performed in line with or better than expectations. Specifically, Reproductive Health, accounting for about 20% of revenues, exceeded expectations due to robust growth in newborn screening, a trend that is projected to continue into the fourth quarter.
Evercore ISI believes that Revvity's guidance is sufficiently conservative, providing a cushion as competitive comparisons ease and the fourth-quarter market potential assumes an increase from third-quarter levels. The unchanged operational margin expectations, despite the reduced revenue guide, underscore confidence in the company's execution abilities.
Furthermore, Revvity's announcement of a 150 million share repurchase and a new 1 billion buyback plan signals management's confidence in market recovery. Looking ahead to FY25, Evercore ISI anticipates a 4-5% organic growth with high single-digit to double-digit EPS growth, suggesting a slight upside to the street's EPS estimates. The new price target of $134 reflects roughly 26 times the estimated CY25 P/E, 23 times EBITDA, and a 3.6% free cash flow yield.
In other recent news, Revvity Inc. outperformed Q3 expectations and subsequently elevated its full-year earnings per share (EPS) forecast. The company's Q3 earnings exceeded analyst estimates, primarily driven by its thriving Diagnostics segment, and revenue for the quarter was $684 million, a 2% year-on-year increase. The Diagnostics segment witnessed a 6% YoY revenue growth, whereas the Life Sciences segment experienced a 2% YoY revenue decline.
Revvity's CEO, Prahlad Singh, expressed satisfaction with the company's Q3 performance, citing positive revenue growth and robust margins. Revvity has revised its full-year 2024 adjusted EPS guidance to a range of $4.83 to $4.87, surpassing the analyst consensus of $4.75. The company has also updated its full-year revenue guidance to $2.75-$2.77 billion.
InvestingPro Insights
Revvity Inc's recent performance and Evercore ISI's updated outlook align with several key metrics and insights from InvestingPro. The company's market capitalization stands at $15.71 billion, reflecting its significant presence in the industry.
InvestingPro data shows that Revvity's P/E ratio (adjusted) for the last twelve months as of Q2 2024 is 45.84, indicating that investors are willing to pay a premium for the company's earnings. This high valuation multiple is consistent with Evercore ISI's positive outlook and price target increase.
An InvestingPro Tip highlights that Revvity "has maintained dividend payments for 54 consecutive years," which underscores the company's financial stability and commitment to shareholder returns. This long-standing dividend history aligns with the management's confidence signaled by the new share repurchase plan mentioned in the article.
Another relevant InvestingPro Tip notes that the "stock generally trades with low price volatility," which may be attractive to investors seeking stability in their portfolio. This characteristic is particularly noteworthy given the recent 3% increase in share price following the company's earnings announcement.
For readers interested in a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide further insights into Revvity's financial health and market position.
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