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On Friday, Bernstein SocGen Group reinstated coverage on Amplifon (BIT:AMPF) SpA (AMP (OTC:AMLTF):IM) (OTC: AMFPF) with a Market Perform rating and set a price target of EUR21.65. The firm’s analyst, Susannah Ludwig, provided a balanced view of the company’s prospects, recognizing Amplifon’s leadership in the fragmented hearing aid retail sector. Ludwig noted the attractiveness of Amplifon’s valuation compared to manufacturers, as the company’s growth is not dependent on product cycles.
The analysis acknowledged that Amplifon’s growth potential is appealing but tempered by near-term uncertainties, particularly in Europe, where the company generates two-thirds of its sales. The potential for Amplifon’s stock to experience multiple expansion is contingent on a growth rebound in Europe, especially in France and Germany, and evidence that the company can achieve margin expansion after several years of flat or declining margins.
Ludwig pointed out that the growth trajectory in France into 2025, coinciding with the four-year anniversary of the 2021 reimbursement expansion, remains uncertain. This is due to the fact that hearing aids typically have a four-year replacement cycle. Additionally, traditional drivers of margin growth, such as pricing power, may present more challenges going forward.
The analyst concluded that given the uncertainties surrounding key growth and margin drivers, Bernstein prefers to maintain a neutral stance with a Market Perform rating on Amplifon stock. This position reflects a cautious approach until more clarity emerges regarding the company’s performance in its significant European markets.
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