CZMWF - Carl Zeiss Meditec: Slightly Better Valuation Still A Significant Upside

2024-05-17 16:50:39 ET

Summary

• Carl Zeiss Meditec has underperformed in the medtech field, but its long-term appeal remains intact.
• The company reported a decline in revenue and margins in the first half of 2023/2024, mainly due to challenges in the Chinese market.
• Despite near-term challenges, the company's future prospects are supported by an aging population, increasing demand for eye care and surgery, and access to healthcare in emerging markets.

Dear readers/followers,

In this article, I mean to follow up on Carl Zeiss Meditec, a company in the medtech field. It's been about 3-4 months since my last update on the business, an article that you can find here . Since that article, the company has underperformed - but this does not really bother me, as you might expect. My thesis at the time was that the company would eventually overcome the margin-related headwinds and destocking issues in China that they had been facing. This has, unfortunately, not yet, been the case. The stock is down around 2.5% since my last piece.

The reason this does not bother me is that the company in question is an extremely solid business. Despite some near-term challenges related to margins and an unfavorable sales mix, I believe the long-term appeal for the business is more than just merely intact....

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