On Friday, Jefferies adjusted its stance on Envista Holdings Corp . (NYSE: NYSE:NVST), downgrading the stock from Buy to Hold and reducing the price target to $23 from $30. The revision comes amid diminishing confidence in the company's growth prospects, particularly regarding its dental implant segment. Jefferies highlighted that the anticipated improvement in Envista's implant business might not materialize until 2025.
The firm acknowledged the potential in Envista's Spark clear aligners but noted that other areas of the company's portfolio are expected to continue facing hurdles throughout 2024. Despite the stock's reasonable valuation at approximately 16 times earnings per share (EPS), Jefferies expressed difficulty in advocating for a higher multiple due to the subdued growth outlook and the company's guidance, which suggests a stronger performance later in the year.
Jefferies also revised its estimates for Envista's earnings before interest, taxes, depreciation, and amortization (EBITDA) for the years 2024 and 2025, cutting them by 8-9%. The new price target of $23 is based on a 15 times multiple of the projected 2025 EPS.
The downgrade reflects a cautious approach towards Envista's near-term financial performance. The firm's analysts indicate a shift in sentiment, moving from a previously bullish outlook to a more reserved expectation, as the company navigates through its challenges. Envista's stock will continue to be monitored by investors as it works towards its long-term goals amidst the changing market dynamics.
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