On Wednesday, Bioventus Inc (NASDAQ:BVS) saw its share price target increased to $9.00 from $6.00 by an analyst at Craig-Hallum, who also reiterated a Buy rating. The company's fourth-quarter sales reached $135.4 million, surpassing the $124.0 million estimate and marking a 7.6% year-over-year increase. Adjusted for the divestiture of the Wound business, the growth represents a 14.3% organic rise.
The analyst highlighted the company's strong performance in both the Pain and Surgical segments, which grew by 22% and 12% respectively. The Pain segment's growth was particularly notable given the previous year's high rebates, which had acted as a headwind. Adjusted EBITDA for the quarter was also higher than expected at $22 million, compared to the anticipated $18.4 million.
Bioventus's positive quarterly results have been interpreted as a sign of stabilization, with expectations for continued improvement throughout fiscal year 2024. The company's guidance for FY24 has exceeded expectations in terms of both revenue and EBITDA, suggesting a promising year ahead. The new CEO, Robert Claypoole, who took the helm in January, has outlined a strategy focusing on profitable growth, operational efficiency, and enhanced liquidity.
The analyst expressed confidence in the company's turnaround, particularly in the Pain business where average selling prices (ASPs) are improving. Additionally, the Surgical business is expected to see above-market growth, and operational discipline is projected to improve the company's liquidity profile.
With Bioventus anticipated to end the year with less than 4 times leverage, the analyst believes it is an opportune time for investors to pay attention to the stock. The $9 share price target is based on a 12.0x multiple of the projected 2024 EBITDA, compared to peer companies trading at an 18x multiple.
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