Rough Sailing Ahead for Carl Zeiss Meditec: "Tough Business Year" - Stock Slides Sharply
Frankfurt
Zeiss Meditec to reduce its long-term profit margins in the future.
Faltering profits, slashed dividends, and a grim outlook: For a while, the days of robust growth and lucrative revenues are behind the medical technology mogul, Carl Zeiss Meditec. Management anticipates a long wait for the investment climate for devices to brighten up. Even expenditure on consumables is showing signs of stagnation. The company projects that earnings before interest, taxes, and amortization (EBITA) and the operating margin will remain nearly identical, or at most slightly above the substantially lowered previous year's level in the new fiscal year. Stock market participants express disappointment: The stock listed in the MDax tumbled by as much as 14% on Wednesday, temporarily reaching its lowest point since 2018.
Now, let's delve a bit deeper.
Behind the Scenes
Interestingly, the stock hasn't been on a relentless downward spiral; instead, it's exhibited some volatility in recent trends. The stock rose by 5.44% on May 13, 2025, peaking at 65.90€, following gains in several preceding days. However, the company's earnings have faced some turbulence, with net income plummeting from €84 million to €61 million in Q2 2025, and earnings per share dropping a staggering 26% compared to the previous year.
Navigating the Challenges
The decline in earnings can be attributed more to profitability hurdles than a nose-dive in stock prices. Despite maintaining a strong foothold in the market, particularly in ophthalmology and microsurgery, the company encounters challenges in maintaining profitability.
Setting Sail Again
When it comes to a probable recovery timeline, no specifics have been provided. However, Carl Zeiss Meditec's strategic focus areas and robust market positions hint at potential for future growth. The company's investor presentation outlines its strategy and outlook, suggesting a continuous endeavor to boost profitability and ensure market leadership.
Financial Health and Forecast
Carl Zeiss Meditec carries a net financial debt of -€414.1 million, which primarily stems from refinancing through a shareholder loan from Carl Zeiss AG. In the 2023/24 period, the company managed an EBIT margin of approximately 13.3%. Despite the current bumps, Carl Zeiss Meditec stands primed to capitalize on its global market presence and technological breakthroughs to foster future growth.
Port of Call
The stock is predicted to sail within a wide range, with a 90% probability of being traded between 49.76€ and 71.10€ over the next three months. On a broader horizon, Carl Zeiss Meditec is viewed to have a favorable price-to-sales ratio compared to some competitors, which might imply potential value for investors.
- The challenging business year for Carl Zeiss Meditec, as reflected in the stock's sharp decline, could stem from medical-conditions and health-and-wellness related sectors, as the company specializes in medical technology, particularly in ophthalmology and microsurgery.
- Amidst these tough times, Carl Zeiss Meditec is looking to finance its recovery and growth through investing in strategic areas, with a focus on boosting profitability and ensuring market leadership, as suggested in their investor presentation.
- The company's financial health is not entirely negative, as it stands to capitalize on its global market presence and technological breakthroughs to foster future growth, despite carrying a net financial debt and facing current bumps in earnings. The stock's favorable price-to-sales ratio compared to some competitors might also suggest potential value for investors.
