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On Tuesday, Stifel analysts maintained a Buy rating on Orthofix International (NASDAQ:OFIX) shares, with a steady price target of $24.00. Currently trading at $12.06, the stock appears undervalued according to InvestingPro analysis. The broader analyst consensus remains bullish, with price targets ranging from $22.00 to $27.20. The firm’s stance remains positive despite Orthofix’s first-quarter performance aligning with projections amidst some unanticipated challenges. Analysts at Stifel noted that the company faced issues such as channel-related dislocation and had one less selling day, which slightly impacted sales. Despite these challenges, InvestingPro data shows the company maintains a healthy current ratio of 2.57, indicating strong liquidity to meet short-term obligations.
Orthofix’s stock experienced a decline, which Stifel analysts understand, attributing it to the market’s typical aversion to revenue revisions. However, they emphasized the company’s "Earnings Power," which was apparent in the first quarter and is expected to be even more pronounced going forward as profitability continues to improve despite temporary revenue setbacks and external pressures.
The analysts anticipate that channel initiatives and federal budget reductions totaling $5 million will affect 2025 revenue by approximately $11 million, or around 1.3%, yet these efforts are expected to still yield mid-single-digit growth. Stifel highlighted that these initiatives are being undertaken from a position of strength and opportunity. Despite the lower revenue forecasts, Orthofix has reiterated its earnings, cash flow, and margin guidance, which Stifel views as a testament to the company’s earnings power.
In their analysis, Stifel underscored that while revenue headwinds have appeared, they are manageable. They suggest that the lowered top-line, combined with reaffirmed EBITDA and cash flow, lends greater credibility to their thesis on Orthofix’s earnings power. They also pointed out Orthofix’s current valuation metrics, trading at 0.8 times enterprise value to sales (EV/Sales) and 7.7 times enterprise value to EBITDA (EV/EBITDA). Furthermore, they anticipate that Orthofix’s EBITDA is on track to surpass $100 million in 2026, which would correspond to approximately 6.3 times EV/EBITDA. For deeper insights into Orthofix’s valuation and growth potential, including exclusive ProTips and comprehensive financial analysis, investors can access the detailed Pro Research Report available on InvestingPro.
In other recent news, Orthofix Medical (TASE:BLWV) Inc. reported its first-quarter 2025 earnings, revealing a significant miss on earnings per share (EPS) forecasts but a slight beat on revenue expectations. The company posted an EPS of -$1.35, falling short of the anticipated -$0.55. However, revenue reached $193.6 million, slightly surpassing the expected $191.01 million. Despite the revenue beat, the disappointing EPS led to a negative market reaction. Orthofix has announced plans to optimize operations, aiming for annual savings of $3 million, and is focusing on product innovation with several new launches planned. The company provided a full-year net sales guidance of $800-$816 million and expects a non-GAAP adjusted EBITDA of $82-$86 million. Orthofix also anticipates positive free cash flow in 2025, with gross margins projected to be around 71%. The company faces challenges such as restructuring costs and distributor transitions, which are expected to impact short-term revenue.
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