On Tuesday, JPMorgan (NYSE:JPM) made adjustments to its expectations for Carl Zeiss Meditec AG (AFX:GR) (OTC: CZMWY), reducing the share price target to EUR56.00 from EUR68.00 while keeping an Underweight rating on the stock.
This revision came after the company issued a profit warning that preceded its third-quarter results, indicating a significant reduction in its forecast for the second half of the fiscal year 2024 earnings before interest and taxes (EBIT).
The company's shares experienced a sharp decline, closing down 20% on Monday. The reduction in the financial outlook was more substantial than market expectations, with a cut greater than 40% to the H2 EBIT projections. This move aligns with the previously signaled concerns from JPMorgan, which had anticipated a downward adjustment in the company's financial performance.
Despite the adjustment to the company's forecasts, JPMorgan has chosen to maintain its Underweight rating. The firm sees persistent risks and anticipates further downward revisions to the fiscal year 2025 and mid-term expectations.
In response to these developments, JPMorgan has decreased its earnings per share (EPS) estimates for Carl Zeiss Meditec by 22% for fiscal year 2024 and by 19% for fiscal year 2025.
With these revised estimates, Carl Zeiss Meditec's shares are now valued at 35 times and 27 times the expected earnings for fiscal years 2024 and 2025, respectively. JPMorgan continues to view the valuation as challenging, suggesting a cautious outlook on the company's future financial performance.
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