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Envista Holdings (NYSE:NVST) witnessed a substantial decline in its stock value on Thursday following the release of its Q4 2023 financial report. This performance prompted William Blair to downgrade its stock rating from Outperform to Market Perform.
Analyst Brandon Vazquez expressed his concern over the company’s Q4 earnings, which fell short of the consensus by 15% and missed his own intra-quarter estimates by $0.01. These estimates had been revised downward after a meeting with NVST management in December.
“At the time, we thought our adjusted estimate might be overly cautious, but it seems we underestimated the challenges faced by the company in the quarter and their potential impact on the 2024 estimates,” Vazquez wrote.
Vazquez also highlighted his surprise at the company’s adjusted EBITDA guidance of 16%–17%, which was notably lower than the consensus expectation of around 19%. He pointed out that despite Envista Holdings’ multi-year efforts to achieve a target of over 22.5%, this marked the second consecutive year of margin contraction.
According to Vazquez, Envista Holdings is likely to face constrained stock performance over the next 12 months or even longer, given the anticipated macroeconomic, geopolitical, and mix-related challenges that are expected to impact the company’s profit and loss statement throughout 2024.
