BTIG upgraded Embecta (EMBC) to Buy from Neutral with a $26 price target Shares gained about 30% in Tuesday trading as investors rewarded management’s decision to discontinue the patch pump program, notes the analyst, who is also “pleased with the decision from a financial perspective.” The rebound in adjusted EBIT margin as a result of a steep cut in R&D spending will unlock significant free cash flow for Embecta to repay debt and reduce its net leverage ratio, the analyst tells investors. When combined with fewer separation-related expenses, the firm thinks Embecta may eventually be able to pursue more opportunistic M&A, the analyst added.
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