Is There Opportunity in Haemonetics After Shares Surge 57% on Expansion News?

• Thinking about whether Haemonetics is a savvy investment right now? Let’s dive into what the market is signaling and where the opportunity may lie for new and existing investors.
• Haemonetics’ stock has seen notable swings recently, soaring 57.7% over the last month and climbing 7.4% just this past week. These moves draw attention when considering both growth and evolving risk perceptions.
• The recent price surge comes on the back of news highlighting the company’s expansion in innovative blood management solutions and growing partnerships with major healthcare providers. These developments have put Haemonetics firmly back on the radar for many market watchers.
• Now, with an impressive valuation score of 5 out of 6, the stock checks most boxes for undervaluation. We’ll break down the various ways you can approach valuation, and we’ll also uncover a perspective that could provide an edge over traditional methods.

Find out why Haemonetics's -8.1% return over the last year is lagging behind its peers.

Approach 1: Haemonetics Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates the true value of a company by projecting its future cash flows and discounting them back to today’s value. This approach examines how much cash the company is expected to generate, adjusting for the risk and value of those future dollars.

For Haemonetics, the current Free Cash Flow stands at $240 million. Analyst estimates provide projections up to 2028, with expectations of Free Cash Flow reaching $291 million by that year. Beyond the five-year analyst window, further projections are extrapolated out by Simply Wall St and continue to show solid growth in annual cash flows through 2035.

When these future cash flows are discounted back to the present using Haemonetics’ current outlook and risk profile, the intrinsic value per share is calculated at $101.69. Based on the recent share price, the DCF model suggests the stock is trading at a 20.6% discount to its estimated fair value, indicating it may be undervalued by current market standards.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Haemonetics is undervalued by 20.6%. Track this in your watchlist or portfolio, or discover 927 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Haemonetics.

Approach 2: Haemonetics Price vs Earnings (PE Ratio)

For profitable companies like Haemonetics, the Price-to-Earnings (PE) ratio is a time-tested metric. It offers a snapshot of how much investors are willing to pay today for each dollar of current earnings. This makes it a straightforward and widely recognized valuation yardstick for companies generating consistent profits.

However, what constitutes a “fair” PE ratio depends on several factors, including the company’s growth prospects and its risk profile. Generally, fast-growing and lower-risk companies command higher PE ratios. In contrast, slower growth or greater risks tend to justify a lower multiple. This context is crucial when interpreting whether a stock’s PE is attractive.

Currently, Haemonetics trades at a PE ratio of 22.5x, which is notably below the Medical Equipment industry average of 28.9x and the peer average of 30.2x. While these comparisons provide some context, they do not capture company-specific factors that should influence valuation.

Simply Wall St’s proprietary “Fair Ratio” takes the analysis further. This metric estimates the PE ratio Haemonetics deserves by factoring in its growth forecasts, profitability, risk profile, market cap, and its standing in the industry. Unlike simple peer or industry averages, the Fair Ratio is designed to reflect the nuances that make each company unique.

For Haemonetics, the Fair Ratio stands at 24.4x. Comparing this to the current PE of 22.5x, the stock is trading slightly below its fair value. This suggests the market may be underappreciating Haemonetics’ growth, profitability, or risk profile relative to its industry.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1433 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Haemonetics Narrative

Earlier, we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is more than just a set of financial forecasts; it is your story about what you believe will drive Haemonetics’ future performance, clearly expressing your view of where the company is headed and why.

On Simply Wall St’s Community page, Narratives make investing more approachable by connecting the story behind the numbers (your fair value, revenue, earnings, and margin assumptions) to a real-time financial forecast and a calculated fair value for the stock. This gives every investor a way to link their unique perspective or thesis to the numbers they see on the charts and compare that directly to the latest share price to decide when it makes sense to act.

Additionally, Narratives update automatically as new data, news, or earnings are released, helping you stay informed and respond to fresh information. For example, one investor could see Haemonetics’ ongoing innovation and robust hospital demand supporting a fair value as high as $108.00, while another, concerned about fierce competition and U.S. market dependence, might calculate a more cautious fair value of $58.00. Narratives empower you to see and share a smarter, more dynamic view of value than any single multiple ever could.

Do you think there's more to the story for Haemonetics? Head over to our Community to see what others are saying!

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.

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