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Needham & Co. analyst Mike Matson upgraded Haemonetics Corporation (NYSE:HAE) from Hold to Buy with a price target of $112.
The analyst says that Haemonetics has reaffirmed its “high-20%” FY26 operating margin goal. To reach this, the company must improve by approximately 600 basis points from its FY24 margin of 21.1%, writes the analyst.
While the analyst earlier doubted the company’s ability to reach this target, the product mix analysis has bolstered their confidence.
The analyst has identified two key factors influencing the company’s gross margin, which includes the reduction in lower-margin Plasma sales to CSL and the expansion of higher-margin Interventional Technologies sales.
These factors alone could improve gross margins by about 400 basis points by FY26. Combined with 200 basis points of operating leverage, HAE should meet its 27%+ operating margin target by then, says the analyst.
Also, Matson says that the CSL headwind is manageable and already incorporated into consensus estimates.
The analyst anticipates multiple expansions as Haemonetics’s quarterly results demonstrate progress toward achieving its FY26 target.
Matson estimates EPS of $4.60 for FY25 and $5.53 for FY26.
Investors can gain exposure to the stock via Neuberger Berman ETF Trust Neuberger Berman Small-Mid Cap ETF (NYSE:NBSM) and SPDR S&P Health Care Equipment (NYSE:XHE).
Price Action: HAE shares are up 4.55% at $87.21 at the last check Wednesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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