Bernstein has reduced its recommendation on Carl Zeiss Meditec AG, moving the stock from Outperform to Market Perform and cutting its price target to EUR31.00 from EUR50.55. The change follows a profit warning issued by the medical-technology company last Thursday and comes amid growing concern about near-term margin performance and management continuity after the abrupt departure of CEO Maximillian Foerst last month.
The research note pointed to materially weaker profitability in the first quarter, with margins contracting by 500 basis points on a year-over-year basis. Bernstein underscored persistent pressure in the company’s businesses across the Americas and in its intraocular lens (IOL) operations in China as key factors behind the downgrade and the revised earnings outlook.
Despite the downgrade, Bernstein highlighted that Carl Zeiss Meditec retains a solid gross profit margin of 52.8% and is still expected to be profitable this year. The firm’s forecast for earnings per share stands at $2.10. Nevertheless, Bernstein now models a further margin contraction of 100 basis points to 10.6% for fiscal year 2025/26, reflecting reduced confidence that the company will reach previously stated profitability targets.
Investors have reacted sharply to the company’s recent announcements. The stock has fallen almost 27% over the past week and is trading close to its 52-week low of $33.36. InvestingPro analysis cited in the coverage suggests the shares may currently be undervalued, though Bernstein’s downgrade signals caution about the medium-term profit trajectory.
Management uncertainty was explicitly cited in Bernstein’s note. The firm described former CEO Maximillian Foerst as "the original architect of the transformation" and said his sudden exit complicates the outlook for executing commercial and profitability initiatives that the company has been pursuing.
Additional signs of pressure emerged from other brokers. Goldman Sachs reduced its recommendation on Carl Zeiss Meditec from Buy to Neutral and lowered its price target from EUR54.00 to EUR42.00. Goldman Sachs pointed to a combination of volume-based procurement challenges, foreign exchange pressures and issues with intraocular lens registration in China as headwinds that could restrain performance.
Financial stability indicators remain in place amid the operational challenges. Data from InvestingPro noted the company has paid dividends for 21 consecutive years and holds sufficient liquid assets to meet short-term obligations, suggesting a measure of balance-sheet resilience even as margins come under strain.
Market participants will be watching the company’s next quarterly report closely. Carl Zeiss Meditec is scheduled to release earnings on February 12 - reported to be 17 days away - which Bernstein and other investors expect could provide important clarity on revenue trends, margin dynamics and the impact of the recent management change.
Context and near-term focus
The analyst actions and the company’s profit warning have shifted attention to operational execution across the medtech group’s regional businesses and to how management plans to address margin compression. Upcoming earnings will be a key moment for the market to reassess valuation and the credibility of the company’s pathway to improved profitability.