On Wednesday, Mizuho (NYSE:MFG) Securities initiated coverage of Envista Holdings Corp . (NYSE: NYSE:NVST) shares, a company specializing in dental and orthodontic manufacturing, with an Underperform rating and a price target of $20.00.
The firm's analysis points to several factors impacting the company's performance, including the soft global dental end-markets that have affected Envista and its peers throughout 2023 and 2024. According to InvestingPro data, six analysts have recently revised their earnings expectations downward, with the company's revenue showing a 3% decline over the last twelve months.
Envista Holdings has experienced a greater drop in EBITDA and EPS this year, attributed in part to its product mix, which includes a higher proportion of specialty products and digital imaging solutions.
Despite these challenges, Envista's stock has outperformed others in its sector, showing a year-to-date decline of 8.56%. InvestingPro analysis reveals the company maintains strong financial health with a current ratio of 2.08, indicating solid liquidity to meet short-term obligations.
The recent C-suite changes at Envista, including the appointment of new CEO Paul Keel, are believed to have laid the groundwork for potential EPS growth in 2025 and 2026. However, Mizuho Securities suggests that the anticipated improvements may already be reflected in Envista's current share prices, which trade at price-to-earnings (P/E) ratios of 21x and 19x for the firm's 2025 and 2026 EPS estimates, respectively.
The Underperform rating and the $20 price target are based on a slightly lower P/E multiple of 18x on Mizuho's 2026 earnings forecast for Envista, which is still above the peer average P/E of approximately 14x. This valuation reflects Mizuho's cautious stance on the stock, considering the current market conditions and the company's recent financial performance.
In other recent news, Envista Holdings Corp. has reported third-quarter earnings and revenue that exceeded expectations. The company posted revenues of $601 million, surpassing the projected $590 million, and adjusted earnings per share of $0.12, beating the estimated $0.09.
However, net income fell to $8.2 million, compared to $21.5 million in the same period last year. Following these results, Stifel maintained a Buy rating on Envista Holdings and increased the price target to $24, while Piper Sandler raised its price target to $17, maintaining a Neutral rating.
Leerink Partners upgraded Envista from Underperform to Market Perform and raised the price target to $23.00, recognizing management's efforts in stabilizing the company's performance. Despite the positive third-quarter results, Needham reiterated a Hold rating on Envista's shares due to the current valuation and potential downside risks.
The company also maintained its 2024 guidance, indicating confidence in its future performance. These recent developments highlight Envista's strong performance amidst the challenging conditions in the dental market.
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