A Seeking Alpha contributor says Carl Zeiss Meditec's recovery is underway. Fundamentals are improving. Risks from competition and currency remain.
Carl Zeiss Meditec (CZMWY) is emerging from a long stretch of negative returns, according to a Seeking Alpha contributor who has tracked the stock for years. The contributor, who holds a long position, said the recovery has started.
The stock had posted a "relatively deep negative RoR" over an extended period, the contributor said. Recent quarters show a stabilization in revenue and an improving product pipeline. The contributor cited new product launches in ophthalmology and microsurgery as key drivers.
The company operates in ophthalmic surgical equipment and diagnostic systems. Demand in the U.S. and Europe is picking up after a post-pandemic slowdown, the contributor said.
Risks remain. Competition from Alcon and Johnson & Johnson could pressure pricing, the contributor said. Currency strength from a strong euro could weigh on international earnings, the contributor said. The contributor acknowledged these risks. The recovery is on track, the contributor said.
What would confirm the turnaround? Sustained revenue growth over the next two quarters and an improvement in operating margins, the contributor said. A failed product launch or a macroeconomic downturn would break the thesis, the contributor said.
The stock trades at a discount to historical multiples, the contributor said. The long position shows conviction, the contributor said.
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