On Wednesday, Citi updated its stance on National Vision Holdings (NASDAQ:EYE), increasing the price target to $25.00 from the previous $19.00, while maintaining a Neutral rating. This adjustment follows National Vision's fourth-quarter financial results, which showcased earnings per share (EPS) of $(0.02), surpassing the consensus estimate of $(0.08). The company's comparable store sales (comps) grew by 5.7%, which was ahead of the consensus expectation of a 2.4% increase. This growth was predominantly driven by America's Best, which saw a 7.2% rise in comps, while Eyeglass World experienced a more modest increase of 1.2%.
The company's management is taking steps to address the disparity in performance between America's Best and Eyeglass World. Strategies include focusing on marketing expenditures, improving the hiring and retention of doctors, and expanding remote medicine services. Despite a weak January, which management attributes to adverse weather conditions, National Vision has observed a sequential improvement in February. For the first quarter, the company anticipates comps to be flat or slightly negative, with expectations for an acceleration in comps throughout 2024.
Citi's analysis suggests that with National Vision currently trading at 12.3 times the firm's forecasted fiscal year 2024 enterprise value to EBITDA (EV/EBITDA), the risk/reward profile appears balanced at the current stock levels. The company's recent performance and forward-looking strategies have been taken into account in revising the price target. National Vision's focus on operational improvements and market strategies is aimed at enhancing its performance in the competitive eyewear market.
InvestingPro Insights
Following the recent update by Citi on National Vision Holdings (NASDAQ:EYE), let's delve into some key metrics and insights from InvestingPro that can provide additional context to the company's valuation and performance. National Vision has demonstrated a significant return over the last week, with a 15.03% price total return, and an even more impressive strong return over the last month, at 19.0%. This momentum is reflected in the three-month price total return of 19.49%, underscoring a positive short-term trend in the stock's performance.
Despite not being profitable over the last twelve months, analysts predict that National Vision will turn a profit this year, which could be an indication of the company's potential to improve its financial health and deliver value to its shareholders. It's worth noting that National Vision does not pay a dividend, which may influence the investment strategy for income-focused investors.
From a valuation standpoint, National Vision's market capitalization stands at $1.81 billion, and the stock is trading at a high EBIT valuation multiple, with an adjusted P/E ratio for the last twelve months as of Q3 2023 at 233.86. This could suggest that investors are expecting higher future earnings growth. Additionally, the company's gross profit margin remains robust at 53.27%, indicating a strong ability to control costs relative to its revenue.
For readers seeking more in-depth analysis, there are additional InvestingPro Tips available, which can provide further insights into National Vision's financial health and market position. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and explore a total of 7 InvestingPro Tips at https://www.investing.com/pro/EYE.
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