STAAR Surgical Company (NASDAQ:STAA) saw its price target adjusted by an analyst from Stifel, with a reduction to $44.00 from the previous $50.00, while the Buy rating on the stock was reaffirmed.
The adjustment comes amid investor concerns that financial projections for 2025/2026 might be revised downward, potentially as soon as the third-quarter 2024 call or earlier. The analyst noted that despite these concerns, the market may have already priced in such adjustments, suggesting that any forthcoming cut could serve as a clearing event for the stock.
STAAR Surgical's shares have been trading at approximately $33, a modest premium compared to its peers in the medical technology sector, which are also expected to see high single to low double-digit percentage growth.
The analyst argues that the current valuation of STAAR Surgical is favorable, even with lower sales estimates, and that the expected growth rate is a solid base for the company's performance.
The analysis highlighted that even in a flat to slightly declining market for refractive procedures, STAAR Surgical could achieve an 8% to 12% year-over-year increase in intraocular lens (ICL) volume.
The growth is predicated on the company maintaining an annual market share gain of two percentage points. The firm's outlook on the company remains positive, advocating for purchasing the stock in the low $30s with a long-term perspective.
Further optimism for STAAR Surgical's future performance is based on potential upside drivers. These include the contribution from the company's second distributor in China, which is expected to stimulate incremental growth, particularly in Tier 3 and 4 cities. Additionally, the analyst anticipates an acceleration of momentum in the United States market for STAAR Surgical.
In other recent news, STAAR Surgical Company has reported record Q2 net sales of $99 million for 2024, marking significant growth, especially in the U.S. and China, driven by the increased adoption of their EVO ICL lens-based technology.
The company also raised its financial outlook for 2024, now expecting net sales to reach between $340 million and $345 million, and adjusted EBITDA to hit around $42 million. Gross profit for Q2 stood at $78.4 million, while operating expenses reached $66.5 million. The GAAP net income for Q2 was $7.4 million, and adjusted EBITDA was $22.5 million.
STAAR Surgical is focusing on growth through increased surgeon engagement, market expansion, and product innovation. The company expressed confidence in its Chinese business amid competition and economic concerns and expects stimulus measures to boost the second half of the year.
InvestingPro Insights
STAAR Surgical Company (NASDAQ:STAA) has been navigating a volatile market, with recent analyst revisions reflecting investor concerns. To provide a clearer picture of the company's financial health, InvestingPro data shows a market capitalization of $1.64 billion, indicating a significant presence in the medical technology sector. Despite the stock's recent downturn, with a one-week price total return of -13.11%, STAAR Surgical maintains a strong gross profit margin of 79.24% over the last twelve months as of Q2 2024. This suggests robust underlying business efficiency, which could support its recovery and growth trajectory.
Two InvestingPro Tips that might be particularly relevant for investors considering STAAR Surgical include the company's liquidity position, with cash holdings exceeding debt, and the fact that liquid assets surpass short-term obligations. These factors indicate a stable financial footing, which may reassure investors looking for companies with solid balance sheets. For those interested in a more in-depth analysis, there are 11 additional InvestingPro Tips available, which can offer further insights into STAAR Surgical's financial nuances and investment potential.
In light of the analyst's positive long-term outlook and the company's financial stability, STAAR Surgical's current market dynamics could present a strategic buying opportunity for investors focused on the healthcare sector. The InvestingPro Fair Value estimate of $38.07 suggests potential undervaluation at the stock's recent close price of $33.27, aligning with the analyst's recommendation to buy at current levels.
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