On Monday, UBS initiated coverage on LEM Holding SA (LEHN:SW) stock, a prominent manufacturer of electrical measurement components, with a Buy rating and a price target of CHF1,600. The firm's forecast is based on anticipated sales growth acceleration, operational leverage benefits, and a capital-efficient business model.
The UBS analyst has predicted that LEM Holding's sales growth will pick up pace, increasing from a -0.8% average over the past decade to an estimated 8.1% annually from the fiscal year 2024 to 2029. This uptick is expected to be fueled by the company's increasing involvement with structural growth drivers, a favorable geographical mix, and a low base for comparison.
The analyst's revenue projections for the fiscal years 2025 to 2027 are 6% higher than the consensus from Visible Alpha, highlighting an expectation that the market is underestimating the recovery of the Chinese market and the projected surge in European electric vehicle (EV) sales to 20% year-over-year in calendar year 2025, compared to just 8% in 2024.
The firm also anticipates that LEM Holding will achieve significant operating leverage due to the increased sales growth, which should more than compensate for the anticipated rise in research and development costs and a potential decrease in gross margins as the business evolves. UBS expects LEM to meet its 20% EBIT margin target by the fiscal years 2026 or 2027.
Finally, UBS highlights LEM Holding's capital-light business model and the expectation of increasing margins, which should position the company's return on invested capital (ROIC) to be among the industry's best. By the fiscal year 2026, LEM's ROIC is projected to reach 26.7%, surpassing the peer group's median of 19.8%. This financial metric is often used to assess the efficiency and profitability of a company's capital investments.
UBS's positive outlook on LEM Holding SA reflects a comprehensive analysis of the company's potential growth trajectory and operational efficiency in the coming years.
In other recent news, Wave Life Sciences (NASDAQ:WVE) has been the subject of several recent developments. Jones Trading has maintained a Buy rating for the company, noting promising data in the Duchenne muscular dystrophy (DMD) treatment landscape. Despite challenges faced by competitor Dyne Therapeutics, Wave Life Sciences' DMD treatment shows encouraging signs of superior tissue concentration and a significant exon skipping rate.
The company has also reported significant reductions in the mutant Huntington protein from its SELECT-HD clinical trial. Furthermore, potential partnership discussions with Takeda could result in a 50-50 R&D and profit split for the HD program. Other developments include the initiation of dosing in their RNA editing program for alpha-1 antitrypsin deficiency.
Financially, Wave Life Sciences reported $154 million in cash on hand, with a projected financial runway until the fourth quarter of 2025. The company recorded collaboration revenue of $19.7 million for Q2 2024, despite a net loss of $32.9 million. Additionally, the company expanded its equity incentive plan by 5 million shares, reflecting its efforts to incentivize and compensate its officers and employees.
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