Stifel maintains LivaNova stock Buy rating, $72 target

On Tuesday, Stifel analysts maintained a Buy rating and a $72.00 price target for LivaNova (NASDAQ:LIVN), following news from Swedish MedTech company Getinge about its planned withdrawal from the Surgical Perfusion market. Getinge's decision to phase out its Heart Lung Machines and related consumables is seen as a significant positive development for LivaNova, which is the market leader in Heart Lung Machine production and a key provider of cardiac surgery consumables. According to InvestingPro data, LivaNova, currently valued at $2.69 billion, maintains a strong financial health score of "GREAT" and appears undervalued based on its Fair Value analysis.

Getinge announced earlier today that it intends to gradually exit the Surgical Perfusion market, with its 2024 business in this sector valued at approximately 450 million Swedish Krona, or about $40 million USD. The company's market share outside the United States (OUS) is estimated at 7%. Despite its withdrawal, Getinge anticipates its Surgical Perfusion business to generate sales of around 300 million Krona, or about $27 million USD, in 2025 as it scales down operations.

LivaNova, with its extensive range of cardiopulmonary products, which accounted for roughly 55% of its estimated sales in 2024, is expected to vie for Getinge's $40 million business. Stifel's preliminary calculations suggest that an additional $10 million in sales could enhance LivaNova's revenue growth by approximately 0.75 percentage points. LivaNova's projected sales growth for 2025 is currently estimated at around 4.7%. InvestingPro data shows the company has already demonstrated strong performance with 11.04% revenue growth in the last twelve months, supported by robust liquidity with a current ratio of 3.37.

The analysts anticipate that LivaNova will address the impact of Getinge's market exit during its fourth-quarter earnings call scheduled for February 25th, 2025. The company is already on track to expand its Cardiopulmonary business supply and achieve growth above the market average in 2025. With Getinge's departure, LivaNova is poised to potentially capture a larger share of the market as the year progresses. For deeper insights into LivaNova's growth potential and financial health, investors can access comprehensive analysis and additional ProTips through InvestingPro's detailed research reports, available for over 1,400 US stocks.

In other recent news, LivaNova PLC demonstrated an impressive track record with seven consecutive quarters of double-digit organic revenue growth, largely attributed to the launch of the Essenz heart lung machine, gains in the oxygenator market share, and a steady demand for epilepsy device replacements. This robust 11% revenue growth in its third quarter has led to the company raising its revenue guidance for 2024 to 8.5%-9.5%, with adjusted diluted earnings per share expected to be between $3.30 and $3.40.

Needham has reaffirmed its positive stance on LivaNova, maintaining a Buy rating following a series of management meetings. The company also reported positive primary endpoint results for its OSPREY trial, which assesses the efficacy of the aura6000™ System, an implantable device designed to treat obstructive sleep apnea.

Furthermore, the U.S. Centers for Medicare and Medicaid Services (CMS) will maintain the current payment level for LivaNova's VNS Therapy™ for drug-resistant epilepsy in 2025. Despite hopes for a higher reimbursement tier, LivaNova does not foresee a negative impact on its business due to this decision. These are the latest developments in the company's operations.

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