Jefferies downgrades Vimian to “hold” on MedTech struggles, CEO exit

Investing.com -- Jefferies has downgraded Vimian Group AB (ST:VIMIAN) to a “hold” from “buy” rating, citing sustained underperformance in its MedTech division and recent leadership instability, in a note dated Wednesday. 

The brokerage also cut its price target from SEK 50 to SEK 40, reflecting lowered financial estimates and increased execution risk.

MedTech, which accounts for 35% of Vimian’s revenue, remains a major drag on group performance. 

Organic growth in the segment is now forecast to decline by 1% in the second half of 2025, with a slow recovery expected due to weak U.S. market conditions and limited visibility into a rebound. 

Overall group organic growth is projected to fall to 5% in 2025, from 9% in 2024. Group adjusted EBITA margin is expected to decline to 24.6% from 25.4% over the same period.

Recent executive changes have further clouded visibility. CEO Patrik Eriksson’s abrupt departure has placed CFO Carl-Johan Zetterberg Boudrie in the role of interim CEO. 

Meanwhile, MedTech head Guy Spörri will leave by year-end, with Veterinary Services chief Ali Tajbakhsh named as interim replacement. 

Jefferies views these changes as reactive and aimed at course correction, but said they introduce near-term uncertainty.

The downgrade follows a mixed Q2 print and what analysts called “ongoing underperformance” in orthopedics. 

Jefferies revised its EPS forecasts down by 13% for 2025, 6% for 2026, and 5% for 2027. 

The updated price target of SEK 40, based on a DCF model, implies a 21x 2026E EV/EBIT multiple, compared with Vimian’s historical average of 25x. 

According to Jefferies, 70% of the target reduction is due to weaker MedTech expectations, while 30% stems from a higher WACC tied to elevated execution risk.

Despite challenges in MedTech, the company’s other three business segments, Specialty Pharma, Diagnostics, and Veterinary Services, are expected to post high single-digit to low double-digit growth in 2025, with stable to improving margins. 

However, analysts noted these areas are unlikely to offset the drag from MedTech in the near term.

Vimian’s earnings per share are now projected at €0.09 for 2025, flat year-over-year, with growth of 27% and 21% expected in 2026 and 2027 respectively. The stock last closed at SEK 35.66, implying a 12% upside to the revised target. 

Jefferies stated that further signs of commercial traction in MedTech, particularly in U.S. orthopedics, and permanent executive appointments would be needed to revisit a more constructive view.