Should You Think About Buying Carl Zeiss Meditec AG (ETR:AFX) Now?

Let's talk about the popular Carl Zeiss Meditec AG (ETR:AFX). The company's shares received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €138 at one point, and dropping to the lows of €105. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Carl Zeiss Meditec's current trading price of €110 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Carl Zeiss Meditec’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Carl Zeiss Meditec

What's The Opportunity In Carl Zeiss Meditec?

Carl Zeiss Meditec appears to be overvalued by 26% at the moment, based on my discounted cash flow valuation. The stock is currently priced at €110 on the market compared to my intrinsic value of €87.36. This means that the opportunity to buy Carl Zeiss Meditec at a good price has disappeared! In addition to this, it seems like Carl Zeiss Meditec’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Carl Zeiss Meditec?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Carl Zeiss Meditec's earnings over the next few years are expected to increase by 36%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in AFX’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe AFX should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on AFX for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for AFX, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Diving deeper into the forecasts for Carl Zeiss Meditec mentioned earlier will help you understand how analysts view the stock going forward. Luckily, you can check out what analysts are forecasting by clicking here.

If you are no longer interested in Carl Zeiss Meditec, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.