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On Wednesday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Livanova shares, reducing the price target from $70 to $60, while still recommending the stock as Outperform. The decision came after Livanova reported a mixed fourth-quarter earnings, missing revenue estimates by $2 million but slightly exceeding earnings per share (EPS) expectations by $0.01. According to InvestingPro data, the medical device maker, currently trading at $41.70 with a market cap of $2.28 billion, has seen its stock take a significant hit, dropping over 12% in the past week.
The company’s initial guidance for the coming year was somewhat conservative, particularly regarding its top-line growth, due to a deceleration in its Epilepsy business. Despite these concerns, the company maintained strong revenue growth of 8.66% in the last twelve months, with its Cardiopulmonary (CP) segment showing particular strength. The company’s solid financial position is reflected in its healthy current ratio of 2.87, indicating strong liquidity. The recent decline in Livanova’s stock price is believed to be connected to the announcement that the Italian Supreme Court is scheduled to conduct a public hearing on February 26 concerning the ongoing SNIA litigation, with a resolution potentially arriving in the first half of the year.
Investors had previously anticipated that the litigation outcome would be delayed until 2026. The concern is that a resolution could lead to a near-term hit to the company’s profit and loss statement, with an estimated negative impact of around $0.45 on the EPS. Despite this, Mizuho analysts suggest that the market may be overreacting to these developments, as they believe the current share price excessively discounts the consistent improvements in the CP division and any potential upside from research and development breakthroughs.
Livanova’s stock movement reflects the market’s reaction to the mixed financial results and the upcoming court hearing, which holds significance for the company’s financial health. The new price target set by Mizuho takes into account the possible early resolution of the litigation and its impact on the company’s earnings.
In other recent news, LivaNova (NASDAQ:LIVN) has reported its fourth-quarter 2024 earnings, which exceeded expectations with an earnings per share (EPS) of $0.81, slightly above the forecasted $0.80. However, the company’s revenue of $322 million fell short of the anticipated $323.64 million. LivaNova projects a 6-7% organic revenue growth for 2025, with an adjusted EPS forecast between $3.65 and $3.75, indicating a 9% growth at the midpoint. Stifel analysts adjusted their outlook on LivaNova, reducing the price target to $60 from $72 while maintaining a Buy rating, citing mid-single-digit revenue growth and potential catalysts in 2025 such as the SNIA litigation ruling and OSPREY trial data. Wolfe Research downgraded LivaNova’s stock from ’Outperform’ to ’Peer Perform’, reflecting a reassessment of the company’s future earnings potential and valuation, with adjusted EPS accounting for stock-based compensation and litigation financing costs. Despite these mixed signals, LivaNova continues to focus on expanding its product portfolio with new launches and FDA submissions in the pipeline.
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