Carl Zeiss Meditec AG has reduced its forecast for the 2023/24 financial year due to a slower-than-expected recovery in the device business. In the first 8 months of the fiscal year ending on May 31, 2024, the company generated revenue of 1,258 million euros without the contribution from the acquisition of Dutch Ophthalmic Research Center B.V. (DORC), representing a 3% decline compared to the previous year. The operating result (EBIT) amounted to 135 million euros, a decrease of 26% compared to the previous year. Due to the weak business performance, revenue is expected to reach around 2,000 million euros, well below the previous target of 2,100 – 2,150 million euros without the DORC contribution. EBIT is expected to be between approximately 215 million euros and approximately 265 million euros, significantly below the previously stated target of a comparable level to the previous year.
The weak development of order intake and revenue is mainly attributed to the device business, which is suffering from a restrictive investment climate among key customer groups, especially in North America. The slow introduction of new government procurement systems for intraocular lenses in China is also negatively impacting revenue and EBIT. In response to the weaker market environment, the company is planning measures to reduce operating costs.
Deutsche Bank Research has lowered Carl Zeiss Meditec’s price target from 102 to 75 euros after the profit warning but maintains the rating at „Hold.“ US investment bank Goldman Sachs has reduced the price target from 90 to 67 euros and kept the rating at „Sell.“ US bank JPMorgan has lowered the price target from 68 to 56 euros after the profit warning and maintained the rating at „Underweight.“
Carl Zeiss Meditec AG expects growth again for the upcoming 2024/25 financial year and plans to introduce innovative new products in key markets. The medium-term goal remains to grow at least as fast as the underlying markets and achieve a sustainable EBIT margin of over 20%.
At the time of the news release, Carl Zeiss Meditec stock was trading at a +0.38% increase with a price of 65.75 euros on Lang & Schwarz (June 20, 2024, 07:41).
The company is focused on overcoming the challenges in the current market environment and is committed to achieving its long-term growth and profitability goals. Despite the reduced forecast for the current financial year, Carl Zeiss Meditec remains optimistic about its future prospects and is taking proactive steps to address the issues affecting its business. Investors will be closely watching how the company’s new product launches and cost-saving measures will impact its financial performance in the coming quarters.