On Friday, Kepler Cheuvreux adjusted its stance on Revenio Group Oyj (REG1V:FH), downgrading the stock from Hold to Reduce and lowering the price target to EUR26.00 from the previous EUR28.00. The decision followed the negative reimbursement decision for Revenio's iCare HOME2 device in the United States, which was highlighted as a key downside in the company's third-quarter financial report for 2024.
The analyst pointed out that the third-quarter earnings for Revenio did not meet the expectations set by Kepler Cheuvreux nor the consensus estimates, even after accounting for the negative foreign exchange impact that the management mentioned. The performance shortfall was attributed to the company's fundus imaging segment, which reportedly grew faster than its tonometers, negatively affecting Revenio's gross margins.
Additionally, it was noted that no significant costs related to the FDA clearance of the iCare ILLUME were recorded in the third quarter. These costs are expected to be deferred to the fourth quarter of 2024 and into early 2025. This deferment could potentially affect the company's financial performance in the upcoming quarters.
The analyst's comments reflect a cautious outlook on Revenio's growth opportunities, especially considering the recent setback in the U.S. market. The reduced price target and downgrade to Reduce suggest a more conservative expectation for the stock's performance in the near term.
InvestingPro Insights
Despite the recent downgrade by Kepler Cheuvreux, Revenio Group Oyj (REG1V:FH) presents a mixed financial picture according to InvestingPro data. The company's market capitalization stands at $852.71 million USD, reflecting its significant presence in the medical technology sector.
InvestingPro Tips highlight that Revenio has maintained dividend payments for 18 consecutive years and has raised its dividend for 5 consecutive years. This consistent dividend policy may appeal to income-focused investors, even in light of recent challenges. The current dividend yield is 1.29%, with a dividend growth of 5.56% over the last twelve months.
The company's financial health appears stable, with InvestingPro data showing that liquid assets exceed short-term obligations, and cash flows can sufficiently cover interest payments. This financial stability could provide some reassurance to investors concerned about the impact of the negative reimbursement decision for the iCare HOME2 device.
However, aligning with Kepler Cheuvreux's cautious stance, InvestingPro Tips indicate that Revenio is trading at a high earnings multiple, with a P/E ratio of 41.09. This high valuation might be challenging to maintain if growth opportunities are constrained, as suggested by the analyst's report.
On a positive note, Revenio's revenue for the last twelve months as of Q2 2024 was $107.64 million USD, with a revenue growth of 2.5%. The company maintains a strong gross profit margin of 70.8%, which could help buffer against potential headwinds mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for Revenio Group Oyj, providing a deeper understanding of the company's financial position and market performance.
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