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On Friday, Bernstein SocGen Group reinstated coverage on Carl Zeiss Meditec AG (AFX:GR) (OTC: CZMWY) with an Outperform rating and set a price target of EUR71.00. Bernstein highlighted the company’s position as a global leader in its market, despite recent challenges including consecutive years of profit warnings. The firm anticipates a recovery for Carl Zeiss Meditec starting in the fiscal years 2024/25, noting that several headwinds are expected to stabilize or turn positive in the second half of the year.
Bernstein’s positive outlook is supported by upcoming product launches, such as Kinevo 900 S and Visumax 800 in China, which are expected to contribute to the company’s recovery. The firm also pointed out that the lowered guidance and expectations from a year ago, combined with a more attractive growth profile and management’s increased focus on margin discipline, make the stock appealing at its current valuation.
The research firm forecasts a Compound Annual Growth Rate (CAGR) of +9% from 2024/25 to 2028/29 for Carl Zeiss Meditec’s top-line, and an even more robust +18% growth in Earnings Per Share (EPS). The EUR 71.00 price target set by Bernstein is derived from a weighted average of 70% to their Price/Earnings (P/E)-implied price at 26.0x the estimated 2025/26 EPS, and 30% to their Discounted Cash Flow (DCF) analysis. The DCF analysis uses a Weighted Average Cost of Capital (WACC) of 8% and a terminal growth rate of 3.5%.
Bernstein’s reinstatement of coverage and the set price target reflect a renewed confidence in Carl Zeiss Meditec’s market position and potential for growth in the coming years, despite the financial turbulence it experienced in the past.
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