On Tuesday, JPMorgan (NYSE:JPM) analyst David Adlington increased the price target for Fresenius (FRE:GR) (OTC: FSNUY (OTC:FSNUY)) shares to EUR56.90, up from the previous EUR41.90. The firm maintains an Overweight rating on the healthcare company’s stock, which has demonstrated strong momentum with an impressive 54.25% return over the past year and is currently trading near its 52-week high of $10.50. InvestingPro data reveals the company maintains a GOOD financial health score, supported by its substantial $22.6 billion in revenue. Adlington expects Fresenius to continue its growth trajectory with mid-single-digit (MSD) revenue and earnings before interest and taxes (EBIT) growth in the fiscal year 2025, despite the anticipated challenges to profit margins from rising energy costs.
The analyst believes that Fresenius’ guidance range has already factored in much of the current macroeconomic and market uncertainties. He anticipates the possibility of the company adjusting its guidance upwards throughout the year. Adlington’s analysis predicts that the Biopharma division could contribute an additional €125 million to EBIT in FY25, which would be sufficient to meet the midpoint of the company’s guidance even if other business segments do not grow year-on-year.
Adlington also addressed the valuation of Fresenius’ stock, noting that the current multiple is based on outdated perceptions. At 10.3 times the projected earnings for FY26, Fresenius’ valuation represents a 48% discount compared to the broader sector, which trades at 20 times earnings. Moreover, it sits at a 13% discount when compared to Fresenius Medical (TASE:BLWV) Care (NYSE:FMS). He argued that Fresenius deserves a narrower discount to the sector, suggesting a 20-30% discount would be more fitting (14-16 times earnings), which implies nearly 50% upside potential for the stock. Current InvestingPro analysis suggests the stock is slightly overvalued at its current P/E ratio of 24.38x, though this reflects significant multiple expansion following the stock’s strong YTD performance of 18.29%.
In other recent news, Fresenius SE (ETR:FREG) has successfully raised approximately $1.15 billion through a combination of share sales and bond placements. The German healthcare company sold around 10.6 million shares of Fresenius Medical Care, representing about 3.6% of its share capital, at a price of 44.50 euros per share. This share sale was conducted at a discount compared to the previous closing price. Additionally, Fresenius issued 600 million euros worth of senior unsecured bonds, which are exchangeable into shares and set to mature in 2028. The exchange price for these bonds is set at 57.85 euros, reflecting a 30% premium over the share offering. The proceeds from these transactions are intended to bolster Fresenius’s balance sheet and reduce its leverage. Despite reducing its stake, Fresenius remains the largest shareholder in Fresenius Medical Care, holding at least 25% plus one share. These developments are part of Fresenius’s ongoing financial strategy.
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