On Friday, Citi reaffirmed its Buy rating on GN Store Nord A/S (GN:DC) (OTC: GGNDF), with a price target of DKK225.00. The endorsement follows a healthcare bus trip in 2024 where discussions with Søren Jelert, CFO of GN Store Nord, took place, focusing on the company's product uptake and market growth expectations.
The conversation highlighted Nexia's performance in a competitive market, despite being the oldest platform compared to rivals such as Intent and Infinio/Infinio Sphere. Management conveyed their confidence in Nexia's momentum and the direction of the company's Hearing R&D pipeline. In addition to these product developments, the Enterprise market was also discussed. Although the current market remains subdued, GN Store Nord is anticipating a growth of 3-5% in the next year.
Citi's optimistic outlook is based on GN Store Nord's potential for above-market growth in the Hearing segment and improving dynamics in the Enterprise market. The company's focus on cost management and debt reduction, targeting a net debt to EBITDA ratio of less than 3.0x by 2025, is expected to contribute to an estimated compound annual growth rate (CAGR) of approximately 18% in EBIT and around 22% in EPS from 2023 to 2029.
The financial firm finds the current calendar year 2025 estimated valuation of GN Store Nord, which stands at approximately 17 times price-to-earnings (P/E), to be compelling when compared to its peers that trade at around 23 times P/E. This valuation, along with the company's growth and financial strategies, supports Citi's Buy rating on the stock.
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