Goldman Sachs raised its rating on GVS (BIT:GVS) to “buy” from “neutral,” highlighting recent margin improvements and positioning the stock as an attractive entry point after a period of price weakness, sending the stock up over 9% on Tuesday.
The brokerage noted that GVS shares have fallen about 15% from their July 7 peak, despite structural gains in profitability over the past three years, even amid challenging demand conditions.
Goldman Sachs said it expects mid-single-digit organic sales growth from 2026, underpinned by an improved margin base, ongoing deleveraging, and planned share buybacks.
The brokerage forecasts an 18.4% compound annual growth rate in adjusted earnings per share (EPS) from 2025 through 2029, effectively doubling the company’s EPS over five years compared with 4.6% cumulative growth projected through 2019-25.
GVS has faced demand challenges in recent years, particularly in its Healthcare and Safety segments, which led Goldman Sachs to downgrade the stock to “sell” in June 2023.
The brokerage later upgraded it to “neutral” in October 2024, citing improved fundamentals and a more balanced risk/reward profile, with earnings supported by pricing and cost efficiencies.
Despite this, GVS delivered 2024 revenues and adjusted EBITDA slightly below the bank’s forecasts, and its shares have lagged both the Industrial and Healthcare STOXX600 indices since mid-2023.
Goldman Sachs said GVS now trades at roughly 12 times 12-month forward EV/EBIT, below its three-year average of 14.7 times, reflecting a significant de-rating of over two turns of EBIT.
The analysts suggested the stock’s current valuation offers a better entry point given the end of the earnings downgrade cycle and anticipated re-acceleration in growth from 2026.
Margins have been a key driver of GVS’s resilience. The company reported a 26.2% adjusted EBITDA margin in 2Q25, up 580 basis points versus FY22.
Goldman Sachs said price increases have contributed significantly, aided by high switching costs in regulated markets.
Operational efficiencies, including production transfers from Bloomer, Wisconsin, to Findlay, Ohio, and from Puerto Rico to Mexico, have also supported margins.
Looking ahead, Goldman Sachs emphasized that execution of production realignment, particularly the transfer of Haemonetics’ blood business to Mexican facilities, will be critical for meeting FY25 guidance.
The brokerage expects near-term growth to be driven by pricing and the expanded business perimeter, with the low end of FY25 guidance assumed in its forecasts.
Healthcare and Life Sciences are expected to lead medium-term growth. Goldman Sachs forecasts a 7.2% CAGR in organic sales for Healthcare from 2025-29, while Safety is expected to grow 6.6% and Energy & Mobility is projected to return to growth in 2027.
Overall, the group’s organic sales growth is expected to reach 6.4% CAGR during 2025-29, more than triple the 2022-25 average implied by FY25 forecasts.
The analysts also noted that GVS’s improved earnings and cash flow could support deleveraging. FY25 guidance includes a targeted net debt/EBITDA ratio of 2.2 times, down from 2.4 times at 2Q25, including a €20 million share buyback.
Source :
https://www.investing.com/news/stock-market-news/gvs-stock-rises-after-goldman-sachs-upgrade-margins-and-growth-outlook-cited-4250663
