Brokers remain positive on the outlook for
-Two brokers upgrade ratings for
-Limited impact on gross margins from supply chain effects
-Opportunities continue from the Philips recall
-A period of multi-quarter growth is expected
Brokers remain generally positive on sleep medical device maker
While management had already flagged lower US device revenues due to the ongoing supply chain issues around semiconductors, the impact was exacerbated by logistic problems. This forced the company to increase its reliance on air freight due to shipping bottlenecks and resulted in a -6.9% miss on the consensus revenue forecast.
After a share price retracement of around -20% from the
Morgan Stanley, on the other hand, injects a note of caution. The broker only estimates 4% upside potential from its
Nonetheless, even Morgan Stanley sees a positive from ongoing troubles at competitor Philips, after an increased number of affected devices was announced. The broker now estimates an additional six months will be needed to complete remediation around the recall.
Gross margins
Gross margins fell to 57.6% from 59.9% in the previous corresponding quarter though there was sequential improvement from 57.2% in the first quarter.
Credit Suisse sees only a limited margin impact after the company implemented a freight surcharge on the first day of the calendar year and forecasts a reasonably steady FY22 margin of 57.5%.
On the other hand, Jarden's earnings growth anticipates an ongoing improvement in growth margin. Numerous tailwinds are cited, including a price premium for the Airsense 11 product, and a lack of discounting for the Airsense 10.
In addition, manufacturing efficiencies are expected to flow both from an increased focus upon the Airsense 11, and as overall supply chain issues resolve.
Philips recall
Based on recent disclosures around the recall, Jarden now expects Philips to be out of the market longer, at least until end of 2022.
However, Goldman Sachs points out the second quarter recall tailwind of
If global supply chain conditions do ease over the third and fourth financial quarters, Wilsons sees a potential recall windfall for
The Outlook
Jarden expects supply constraints will alleviate in line with management expectations and the company is set to benefit from a period of multi-quarter growth. This is expected to result from a backlog of new sleep diagnosis, as new patient flow in some regions is still not back to pre-covid levels.
Also, a boost is expected from Airsense 11, which is yet to be launched into the rest of the world (ROW) market and is believed to be priced 15% higher than the Airsense 10.
Finally, the analyst expects an alleviation in freight costs along with the additional protection of the freight surcharge from new freight charge implemented in January.
Meanwhile,
Overall, FNArena's database has six broker ratings with five Buys and one Hold. The
For those brokers not updated daily in the FNArena database, both Jarden and Wilsons have an Overweight rating and Goldman Sachs has a newly-minted Buy rating, as mentioned previously.
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