Embecta Corporation (EMBC) AI Stock Analysis

• Market Cap: $659.24M
• Dividend Yield: 5.29%
• Average Volume (3M): 676.01K
• Price to Earnings (P/E): 11.3
• Beta (1Y): 0.83
• Revenue Growth: -1.31%
• EPS Growth: 4.59%
• Country: US
• Employees: 2,100
• Sector: Healthcare
• Sector Strength: 66
• Industry: Drug Manufacturers - Specialty & Generic
• EPS (TTM): 1.00
• Shares Outstanding: 58,134,434
• 10 Day Avg. Volume: 733,018
• 30 Day Avg. Volume: 676,006
• PEG Ratio: 2.45
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.67
• Price to Cash Flow (P/CF): -35.20
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $20.50
• Price Target Upside: 80.78% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

Embecta Corporation's overall stock score reflects significant financial challenges, with negative equity and declining cash flow. While valuation metrics like P/E ratio and dividend yield suggest potential value, technical analysis indicates a bearish trend. The earnings call highlights strategic growth plans and debt reduction initiatives, but revenue declines remain a concern.

Positive Factors

Cost Management

The organizational restructuring plan, along with the discontinuation of the patch pump program, is expected to generate annualized pre-tax cost savings of $60-$65M.

Debt Management

The decision to cut R&D spending significantly increases free cash flow, allowing Embecta to repay debt and reduce its net leverage ratio.

Financial Performance

Embecta reported an impressive F4Q24 quarter, beating expectations on adjusted revenue, margins and EPS, while setting FY2025 preliminary adj. EBITDA and adj. EPS guidance well ahead of expectations.

Negative Factors

Future Revenue Expectations

Revenue guidance for 2025 is set below current market expectations, indicating a potential decline in financial performance.

Growth Opportunities

The company announced its intention to exit its insulin patch-pump program, which eliminated the sole growth opportunity around the story.

Market Shift

Diabetics are rapidly shifting away from multiple daily injection therapy toward automated pump therapy.

Embecta Corporation Business Overview & Revenue Model

Company Description

Embecta Corporation (EMBC) is a company that operates in the medical technology sector, primarily focusing on providing solutions for people living with diabetes. The company specializes in the development, production, and distribution of diabetes care devices, including insulin delivery devices. Embecta aims to enhance the lives of diabetes patients through innovative and reliable medical products.

How the Company Makes Money

Embecta Corporation generates revenue by designing and selling medical devices specifically tailored for diabetes management. The company's primary revenue stream comes from the sale of insulin delivery devices, such as insulin pens and syringes, which are essential for diabetes patients. Embecta's products are distributed through various channels, including direct sales to healthcare providers, partnerships with medical distributors, and collaborations with healthcare institutions. The company may also engage in strategic partnerships with other companies in the medical technology field to expand its market reach and enhance its product offerings. Additionally, Embecta benefits from ongoing research and development efforts to innovate and improve their product line, maintaining competitiveness in the diabetes care market.

Embecta Corporation Financial Statement Overview

Summary

Embecta Corporation faces challenges across its financial statements. The income statement reflects shrinking margins and declining revenue growth. The balance sheet is concerning with negative equity and high leverage, while the cash flow statement highlights issues in cash generation and management. The company may need strategic adjustments to improve financial health and stability.

Income Statement

The income statement shows a declining trend in revenue from the previous annual period to the TTM, indicating some challenges in revenue generation. Gross profit margin for TTM is approximately 63.68%, which is healthy, but net profit margin has decreased to around 5.19% due to a significant drop in net income. The company has experienced shrinking EBIT and EBITDA margins, suggesting declining operating efficiency.

Balance Sheet

The balance sheet reveals potential risks with negative stockholders' equity, indicating high leverage and financial instability. The debt-to-equity ratio is not applicable due to negative equity, but the high level of total debt poses a risk. The equity ratio is negative, highlighting that liabilities exceed assets, which could be concerning for creditors and investors.

Cash Flow

Cash flow metrics indicate a reduction in operating cash flow from previous periods. The free cash flow growth rate is negative, showing a decline in cash available after capital expenditures. The operating cash flow to net income ratio is low at 0.76, suggesting inefficiencies in converting income into cash. Overall, cash flow stability seems to be compromised.

Breakdown
TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement		Total Revenue
1.16B	1.12B	1.12B	1.13B	1.17B	1.09B
	Gross Profit
807.80M	735.20M	749.90M	774.90M	800.00M	762.60M
	EBIT
429.80M	166.80M	221.50M	309.60M	492.00M	486.50M
	EBITDA
462.30M	199.00M	245.40M	400.20M	530.00M	524.00M
	Net Income Common Stockholders
337.90M	78.30M	70.40M	223.60M	414.80M	427.60M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
210.00M	267.50M	326.50M	330.90M	0.00	0.00
	Total Assets
1.15B	1.29B	1.21B	1.09B	788.00M	738.00M
	Total Debt
1.58B	1.61B	1.64B	1.64B	4.00M	5.00M
	Net Debt
1.37B	1.34B	1.31B	1.31B	4.00M	5.00M
	Total Liabilities
1.92B	2.02B	2.04B	1.98B	194.00M	166.00M
	Stockholders Equity
-768.80M	-738.30M	-821.70M	-891.40M	594.00M	572.00M
Cash Flow		Free Cash Flow
410.90M	19.90M	41.20M	388.20M	417.00M	456.60M
	Operating Cash Flow
439.40M	35.70M	67.70M	412.20M	456.00M	498.50M
	Investing Cash Flow
-28.50M	-15.80M	-26.50M	-24.00M	-39.00M	-41.90M
	Financing Cash Flow
-113.00M	-73.40M	-48.70M	-48.00M	-417.00M	-456.60M

Embecta Corporation Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 11.34
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EMBC, the sentiment is Negative. The current price of 11.34 is below the 20-day moving average (MA) of 12.15, below the 50-day MA of 13.33, and below the 200-day MA of 15.18, indicating a bearish trend. The MACD of -0.61 indicates Positive momentum. The RSI at 32.87 is Neutral, neither overbought nor oversold. The STOCH value of 11.36 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EMBC.

Embecta Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SUPN	65 Neutral	$1.72B	23.33	7.55%	―	8.94%	5171.26%
ANIP	65 Neutral	$1.49B	―	-4.86%	―	26.20%	-219.22%
DVAX	57 Neutral	$1.28B	59.02	4.48%	―	19.36%	―
Sector *	51 Neutral	$5.19B	3.13	-40.94%	2.95%	17.94%	2.00%
EMBC	48 Neutral	$659.24M	11.28	-10.61%	5.29%	-1.31%	4.59%
AVDL	47 Neutral	$775.93M	―	-60.44%	―	504.79%	74.24%
HROW	44 Neutral	$855.34M	―	-24.97%	―	53.32%	33.82%

Embecta Corporation Corporate Events

Embecta Corp Appoints Anthony Roth as VP and CAO

Embecta Corp. has appointed Anthony Roth as Vice President and Chief Accounting Officer, effective December 2, 2024. Roth brings extensive experience from Ascential plc and Summit Health, enhancing Embecta’s financial leadership. His compensation package includes a $400,000 base salary, incentives, and stock units, aligning with Tier III executive benefits. This strategic leadership move aims to bolster Embecta’s financial operations and growth.