Valuation Scorecard: Stock Rating F-Lowest (3/15/24)-Haemonetics Corp (HAE).

What is the market’s view of Haemonetics’ future operating performance as reflected in the current price of $82? Haemonetics’ common shares will need to reach $137 to achieve average annual stock market performance of 9.0% over the next 6 years. Upper quartile performance will require a $161 Haemonetics stock price by 2029.

Executive Summary

• Key Haemonetics characteristics: very high profitability, stability, above average expected growth, and low financial strength. A big positive influence on Haemonetics’ valuation is its superior Profitability.
• High valuation, below market shareholder returns. Current valuation levels are high relative to the Haemonetics Peer Group. Recent market returns have underperformed the Haemonetics Peer Group. Total shareholder returns expected to significantly lag the overall equity market. Based on current investor expectations, Haemonetics shares should reach a level of $66 by 2029 — an -3.6% per year total shareholder return. A 2029 stock price of $137 would reflect median performance and a price of $161 would be required to reach upper quartile performance.
• Historical growth has been high relative to the Haemonetics Peer Group and forecasted growth is relatively high. Haemonetics’ historical income statement growth and balance sheet growth have diverged. Revenue growth has paralleled asset growth; earnings growth has exceeded equity growth resulting in an improving return on equity. Haemonetics’ consensus growth expectations are lower than historical growth.
• Profitability has been Haemonetics’ biggest valuation strength. Return on Equity, and Pretax Margin are group leading. These factors have strengthened market perceptions of Haemonetics. The company has very high excess cash and will have to work to reinvest at attractive returns to support profitability and valuation.
• Haemonetics’ risk profile is neutral. Overall variability has been above average with above average revenue variability, above average E.P.S. variability, and very low stock price volatility. Financial Strength is below average and earnings’ expectations are relatively high. The debt/capital ratio has been relatively steady.

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