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On Friday, Barrington Research adjusted its stance on LeMaitre Vascular (NASDAQ:LMAT), moving the stock rating from Outperform to Market Perform. The decision was based on a reassessment of the stock’s valuation after a significant price increase. Barrington Research’s analysts highlighted that LeMaitre’s shares have experienced a remarkable surge since May 2023, which is when they had previously upgraded the stock at $54.75. The stock has indeed delivered an impressive 41.7% return over the past year, according to InvestingPro data, with current trading multiples showing a P/E ratio of 54x. However, they now believe the stock’s valuation is overly extended.
LeMaitre Vascular’s stock has been on an impressive trajectory, but Barrington Research suggests that the current price may not leave much room for additional growth. The analysts pointed out that to justify a mere 5% stock price appreciation from the closing price of $99.91, they would need to apply a 28x multiple to their fiscal year 2025 adjusted EBITDA estimate. This aligns with InvestingPro’s analysis, which indicates the stock is currently overvalued, trading at an EV/EBITDA multiple of 36x. According to Barrington, such a high multiple is unwarranted, even for a company that has consistently performed at a high level over the past several years. InvestingPro subscribers have access to 12 additional valuation metrics and insights that could help evaluate this stock’s potential.
The downgrade reflects Barrington Research’s view that LeMaitre’s stock may not offer significant upside potential at its current price. The firm’s analysts have expressed that the valuation has become too steep, despite the company’s strong execution. They emphasized that their decision is purely a valuation call and not a reflection of the company’s operational performance.
LeMaitre Vascular has been recognized for its exceptional execution, with the research firm noting that the company has been operating at an "A or A+" level. This high standard of performance has been consistent for the last four to five years, underscoring the company’s successful track record.
Investors and market watchers will be observing how LeMaitre Vascular’s stock responds to the rating change. Barrington Research has set the tone for a more cautious approach to the stock, basing its judgment on a thorough analysis of the company’s financial projections and market position. Despite valuation concerns, InvestingPro data shows the company maintains excellent financial health with an overall score of 3.3 (GREAT), supported by strong profitability metrics and a healthy balance sheet. For deeper insights into LMAT’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, LeMaitre Vascular’s financial performance for the fourth quarter of 2024 has garnered mixed reactions from analysts and investors. The company reported earnings per share (EPS) of $0.49, surpassing forecasts of $0.46, and achieved revenue of $55.7 million, slightly exceeding projections. Despite this, Oppenheimer downgraded LeMaitre’s stock rating from Outperform to Perform, citing concerns over the sustainability of price increases that have contributed to its premium valuation. Meanwhile, JMP Securities raised the price target for LeMaitre to $113, maintaining a Market Outperform rating, highlighting the company’s consistent financial results and strategic initiatives.
LeMaitre’s Q4 results also showed a 14% year-over-year increase in sales, with operating income rising by 26% and an improved gross margin of 69.3%. The company has announced plans to expand its sales force and expects to add 13 new sales representatives by the end of 2025. Looking forward, LeMaitre provided revenue guidance for 2025 in the range of $235.4-242.8 million, with EPS projected to grow by 16% to $2.24. The company’s strategic focus includes expanding its presence in China and Europe, with the recent approval of XenoSure in China and plans to begin sales in the second half of 2025.
The company’s robust cash position, bolstered by a recent convertible note offering, positions it well for potential acquisitions and investments. However, Oppenheimer’s concerns about long-term growth sustainability and LeMaitre’s high price-to-sales multiple compared to industry peers remain points of caution for investors.
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