On Wednesday, Deutsche Bank adjusted its outlook on Demant A/S (DEMANT:DC) (OTC: WILYY) shares, a leading manufacturer of hearing aids. The bank's analyst set a new price target for the company at DKK285.00, a decrease from the previous target of DKK373.00. The firm maintained a Hold rating on the stock.
The revision follows Demant's unexpected profit warning for 2024, which is anticipated to prompt a consensus revision with an approximate 7% decrease in EBIT forecasts. Demant's profit warning resulted from a strategic shift in its sales approach for the premium Oticon hearing aids in the United States market.
The company has decided to withdraw its premium Oticon hearing aids from the managed care channel, which typically offers lower margins. Demant aims to compensate for this change by boosting sales in the independent channel, where products generally yield higher margins.
The move to focus on the independent channel is intended to enhance profitability. Still, it also presents a challenge in terms of achieving the necessary sales volume to offset the exclusion from the managed care channel. This balance will be critical for Demant's financial performance moving forward.
Investors and market observers are now watching how Demant's strategy will impact its financial results and position in the competitive hearing aid industry. The company's ability to successfully increase its presence in the independent channel will be a key factor in determining the effectiveness of its new strategy.
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