On Thursday, Stifel maintained a Buy rating on Envista Holdings Corp . (NYSE: NYSE:) shares and increased the price target to $24 from $21, following the company’s third-quarter financial performance. Envista Holdings, which operates in the dental industry, reported robust third-quarter revenue and EBITDA, exceeding expectations.
The company also succeeded in preserving its 2024 guidance, which was seen as a positive sign amidst recent pressure on dental stocks due to ongoing negative earnings revisions.
The third-quarter results demonstrated that Envista’s Implant sales remained steady year-over-year, marking a trend towards aligning with the market growth rate for the second consecutive quarter.
Moreover, the gross margin for Spark, another product line, improved for the sixth consecutive quarter. These two product lines, Implants and Spark, are anticipated to be key drivers for Envista’s future margin expansion.
Envista’s ability to maintain its 2024 guidance, despite the challenges faced by the dental industry, has been well received. The company’s performance in the third quarter has effectively lowered the expectations for the fourth quarter, due to the overachievement in the previous quarter. This has set a more attainable target for the company to meet or exceed in the upcoming quarter.
The analysis highlighted that while Envista’s total revenue for 2024 is projected to be comparable to that of 2021, the expected normalized EBITDA margins are still approximately 600 basis points lower. Despite this, the company’s recent performance and steady progress in key product areas have contributed to the positive outlook and the decision by Stifel to raise the price target on the stock.
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