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On Friday, Bernstein SocGen Group analysts adjusted their stance on Revvity Inc (NYSE:RVTY), shifting the stock's rating from Outperform to Market Perform and setting a price target of $130.00.
The revision was based on the analysts' view that their previous investment thesis for Revvity has been realized and that the current market recovery makes the stock, which has significant preclinical exposure, less appealing.
According to InvestingPro data, the $14.17 billion market cap company currently trades at $116.42, with analyst targets ranging from $120 to $163.44.
The analysts elaborated on their decision, stating that while there is still a 12% upside to the new price target, the enthusiasm for holding a lower-beta stock during a time of market recovery has diminished. The term "lower-beta" refers to stocks that are less volatile and therefore less likely to experience large swings in price compared to the broader market.
InvestingPro analysis confirms this characteristic, highlighting that the stock generally trades with low price volatility, while maintaining impressive financial stability with a current ratio of 3.56.
Revvity, a company with considerable preclinical exposure, seems to have reached a point where the analysts believe the stock may not offer the same growth potential as it did previously. The downgrade to Market Perform suggests that the analysts now view Revvity as likely to perform in line with the general market rather than outperform it.
The new price target of $130.00 represents a modest increase from the stock's current trading level, indicating that while the analysts see some growth potential, they do not anticipate significant gains in the near term.
In other recent news, Revvity has secured a new $1.5 billion unsecured revolving credit facility, extending its financial flexibility until January 7, 2030. This agreement, involving major financial institutions such as Bank of America, JPMorgan Chase (NYSE:JPM) Bank, and Goldman Sachs Bank, replaces a previous credit agreement. The terms allow Revvity to borrow at a base rate or a term SOFR rate, with conditions related to the company's debt-to-capitalization ratio.
Revvity's third quarter of 2024 financial results showed strong performance, with total adjusted revenues of $684 million and a rise in adjusted operating margins to 28.3%. The company's earnings per share (EPS) surpassed expectations, leading to an increase in full-year guidance for adjusted EPS. A new $1 billion share repurchase plan was also revealed.
The company's Q3 earnings call further highlighted the robust financial results. The adjusted EPS reached $1.28, beating expectations by $0.16, and the full-year adjusted EPS forecast was raised to a range of $4.83-$4.87. Free cash flow for the year is projected to be around $550 million. Despite a 3% organic decline in the Life Sciences segment, the Diagnostics segment reported a 5% organic revenue increase.
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