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On Thursday, Citi analyst Paul Lejuez updated the price target for National Vision Holdings (NASDAQ:EYE) to $13.00, up from the previous $12.00, while keeping a Neutral rating on the stock. Currently trading at $12.14, the stock has shown significant volatility, with InvestingPro data showing a 25% gain over the past six months despite a 46% decline year-over-year. The adjustment follows National Vision’s recent financial guidance for fiscal year 2025, which includes comparable store sales growth projections ranging from 0.5% to 3.5%, versus the consensus estimate of 1.8%. The company also forecast earnings per share (EPS) to be between $0.52 and $0.64, compared to the consensus estimate of $0.53.
National Vision management outlined a new strategic direction focusing more on managed care customers, alongside their traditional cash-paying clientele. The company aims to enhance its product offerings and increase marketing efforts toward the managed care segment, which represents 40% of its revenue, is growing at a high single-digit rate, and provides a more reliable revenue stream than cash transactions. According to InvestingPro analysis, the company maintains a gross profit margin of 58.1% despite current challenges, with revenue growing at 3.8% in the last twelve months to $1.82 billion.
Despite the expectation for low single-digit growth in comparable store sales, the company’s guidance suggests a 50 basis point improvement in EBIT margin at the midpoint. This positive outlook is attributed to the company’s cost-saving measures in selling, general, and administrative expenses (SG&A), which previously required mid single-digit comparable sales growth to leverage SG&A effectively.
Lejuez noted the strategic shift as a positive development, indicating a more constructive view on the stock following the fourth-quarter earnings call. However, he maintained a Neutral stance, citing the stock’s current trading at 6.4 times the firm’s estimated fiscal year 2025 enterprise value to EBITDA ratio and the ongoing trend of core customers delaying purchases.
In other recent news, National Vision Holdings Inc. reported a stronger-than-expected financial performance for the fourth quarter of 2024. The company announced earnings per share (EPS) of -$0.04, which was better than the forecasted -$0.07. Additionally, National Vision’s revenue surpassed expectations, reaching $437.3 million compared to the anticipated $432.83 million. For the full year, the company’s net revenue increased by 3.8% to $1.823 billion. Looking ahead, National Vision projects its net revenue for 2025 to be between $1.901 billion and $1.955 billion, with plans to open 30 to 35 new stores. In terms of strategic initiatives, the company is focusing on managed care, which now constitutes 40% of its revenues. Furthermore, National Vision recently appointed Chris Laden as its new CFO, effective March 31, 2025.
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