Canaccord Genuity has upgraded Biomedical Devices and Services company Bioventus Inc BVS, highlighting greater insight into the progress of the turnaround and plans for future investment and growth.
The analyst notes that the business is now stabilized, and management is discussing strategic investments in the existing business to drive future growth.
Management expects that the worst of challenges are likely behind the company.
Canaccord indicates that the management anticipates that the continual investments made in its Exogen business during the past few years will enhance the quality of the product.
They foresee that the effectiveness of the sales force will begin to yield advantages in 2024, leading to a projected low-single-digit to mid-single-digit growth in product sales.
Furthermore, Canaccord acknowledges that the company will likely need to resolve a potential issue with interest coverage covenants (a late 2024 issue pending) and find a permanent CEO.
The valuation fully reflects these challenges, with the stock trading at 1.4x 2024 EV/ Sales.
Given this low valuation and high probability of continued improvement, Canaccord upgraded from Hold to Buy and increased the price target to $7 from $3.66.
BVS's primary focus in 2023 revolves around enhancing EBITDA and cash flows.
Moving into 2024, the company aims to bolster revenue growth while maintaining operational margins.
By 2025 and 2026, the goal is to progressively expand margins, aiming to achieve an EBITDA margin exceeding 20%.
Price Action: BVS shares are up 16.60% at $5.27 on the last check Thursday.
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