Embecta Corporation (EMBC) AI Stock Analysis

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Embecta Corporation

(NASDAQ:EMBC)

Rating:51Neutral

Price Target:

$10.50

▲( 0.00% Upside)

Embecta Corporation's overall stock score of 51 reflects significant financial challenges, including negative equity and declining revenues. While the company has achieved notable debt reduction and continues to pay dividends, bearish technical indicators and macroeconomic pressures weigh on its current valuation. Strategic initiatives and restructuring plans are in place, but their impact remains to be seen.

Positive Factors

Debt Management

A significant debt paydown of nearly $30 million in the quarter improves financial flexibility and reduces leverage.

Financial Performance

The company's EBITDA and EPS came in comfortably ahead of expectations, indicating strong financial performance.

Product Expansion

Upside risk could stem from the GLP-1 pen needle opportunity and an expansion into new product offerings.

Negative Factors

Market Shift

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

Revenue Guidance

EMBC reduced the full year revenue guide due to lower volumes at a specific U.S. retail pharmacy customer that is closing stores.

Sales Decline

Total sales declined by 9.8% year-over-year, highlighting a challenging sales environment for the company.

Embecta Corporation (EMBC) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$613.94M

Dividend Yield4.86%

Average Volume (3M)512.39K

Price to Earnings (P/E)11.6

Beta (1Y)0.92

Revenue Growth-4.68%

EPS Growth-25.40%

CountryUS

Employees2,000

SectorHealthcare

Sector Strength43

IndustryDrug Manufacturers - Specialty & Generic

Share Statistics

EPS (TTM)0.70

Shares Outstanding58,442,510

10 Day Avg. Volume692,693

30 Day Avg. Volume512,394

Financial Highlights & Ratios

PEG Ratio-0.45

Price to Book (P/B)-0.90

Price to Sales (P/S)0.00

P/FCF Ratio24.08

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$17.67

Price Target Upside68.29% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Embecta Corporation Business Overview & Revenue Model

Company DescriptionEmbecta Corp., a medical device company, focuses on the provision of various solutions to enhance the health and wellbeing of people living with diabetes. Its products include pen needles, syringes, and safety devices, as well as digital applications to assist people with managing their diabetes. The company primarily sells its products to wholesalers and distributors in the United States and internationally. Embecta Corp. was founded in 1924 and is based in Parsippany, New Jersey. Embecta Corp.(NasdaqGS:EMBC) operates independently of Becton, Dickinson and Company as of April 1, 2022.

How the Company Makes MoneyEmbecta 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's financial health is under pressure. The income statement shows declining revenue and shrinking margins, with the net profit margin notably low. The balance sheet reveals negative shareholders' equity, indicating high leverage, and the cash flow statement shows difficulties in generating and managing cash.

Income Statement

Neutral

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

Negative

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

Negative

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.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
1.11B	1.12B	1.12B	1.13B	1.17B	1.09B
	Gross Profit
705.20M	735.20M	749.90M	774.90M	800.00M	762.60M
	EBIT
182.60M	166.80M	221.50M	309.60M	492.00M	486.50M
	EBITDA
221.00M	199.00M	245.40M	400.20M	530.00M	524.00M
	Net Income Common Stockholders
57.50M	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
28.90M	19.90M	41.20M	388.20M	417.00M	456.60M
	Operating Cash Flow
43.50M	35.70M	67.70M	412.20M	456.00M	498.50M
	Investing Cash Flow
-14.60M	-15.80M	-26.50M	-24.00M	-39.00M	-41.90M
	Financing Cash Flow
-105.10M	-73.40M	-48.70M	-48.00M	-417.00M	-456.60M

Embecta Corporation Technical Analysis

Technical Analysis Sentiment

Negative

Last Price10.50

Price Trends

50DMA

12.22

Negative

100DMA

14.49

Negative

200DMA

14.99

Negative

Market Momentum

MACD

-0.28

Positive

RSI

39.78

Neutral

STOCH

26.11

Neutral

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 10.5 is below the 20-day moving average (MA) of 12.11, below the 50-day MA of 12.22, and below the 200-day MA of 14.99, indicating a bearish trend. The MACD of -0.28 indicates Positive momentum. The RSI at 39.78 is Neutral, neither overbought nor oversold. The STOCH value of 26.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EMBC.

Embecta Corporation Peers Comparison

Overall Rating

UnderperformOutperform

Sector (53)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SUPN	68 Neutral	$1.79B	29.01	6.32%	―	11.82%	―
ANIP	60 Neutral	$1.24B	―	-5.19%	―	30.26%	-173.36%
AVDL	59 Neutral	$859.04M	―	-34.65%	―	252.64%	85.10%
HROW	57 Neutral	$950.52M	―	-37.23%	―	53.49%	33.18%
Sector *	53 Neutral	$5.14B	3.06	-43.57%	2.81%	16.81%	-0.12%
EMBC	51 Neutral	$613.94M	11.59	-10.61%	4.86%	-4.68%	-25.40%
DVAX	48 Neutral	$1.25B	64.45	-10.45%	―	24.76%	-783.38%

* Healthcare Sector Average

Performance Comparison

EMBC

Embecta Corporation

10.72

-2.03

-15.92%

DVAX

Dynavax

9.80

-1.59

-13.96%

AVDL

Avadel Pharmaceuticals

9.13

-6.62

-42.03%

SUPN

Supernus Pharmaceuticals

32.10

4.59

16.68%

ANIP

ANI Pharmaceuticals

57.79

-3.53

-5.76%

HROW

Harrow Health

25.90

8.01

44.77%

Embecta Corporation Earnings Call Summary

Earnings Call Date:May 09, 2025

(Q2-2025)

% Change Since: -21.05%|

Next Earnings Date:Aug 07, 2025

Earnings Call Sentiment Neutral

While Embecta is making significant progress in debt reduction, employee engagement, and strategic partnerships for product expansion, the company faces challenges with declining revenues, particularly in the US and international markets, and tariff impacts on margins. The company has adjusted its revenue guidance downward but is implementing cost-saving measures to mitigate these issues.

Q2-2025 Updates

Positive Updates

Exceeding Revenue Expectations

Second quarter revenue totaled $259 million, surpassing expectations of $250 million to $255 million due to strong constant currency performance and favorable foreign exchange rates.

Debt Reduction Progress

Embecta made a $27 million principal payment on its Term Loan B facility during the quarter and has reduced debt by approximately $60 million year-to-date, on track to achieve the goal of reducing debt by $110 million in fiscal 2025.

Employee Engagement and Recognition

Conducted a company-wide employee engagement survey, resulting in Embecta being certified as a Great Place to Work for 2025 in eight countries.

Strategic Partnerships in Product Expansion

Received several purchase orders from generic manufacturers to co-package pen needles, expanding into the generic GLP-1 drug market.

Operational and Financial Efficiency

Initiated a restructuring plan expected to save $7 million to $8 million in pre-tax costs during the second half of fiscal 2025.

Negative Updates

Decline in Revenue

Second quarter revenue declined by 9.8% year-over-year on an as-reported basis and 7.7% on an adjusted constant currency basis.

US Revenue and Inventory Issues

US revenue declined by 8.4% year-over-year on an adjusted constant currency basis due to timing of price increases and customer inventory adjustments.

International Revenue Decline

International revenue declined by 7.0% on an adjusted constant currency basis due to ERP-related inventory builds in the prior year.

Tariff Impacts on Margins

Adjusted gross margins affected by an estimated 25 basis points due to tariffs, primarily from US-China trade dynamics.

Lowered Revenue Guidance

Lowered full-year 2025 constant currency revenue outlook due to lower projected US volumes from customer inventory reductions tied to store closures.

Company Guidance

During Embecta Corp.'s fiscal second quarter 2025 earnings call, detailed financial guidance was provided for the remainder of the fiscal year. The company reported second-quarter revenue of $259 million, surpassing the previous guidance range of $250 million to $255 million, largely due to better than anticipated foreign exchange rates and constant currency performance. For fiscal year 2025, Embecta aims to reduce debt by approximately $110 million, with $60 million already achieved year-to-date. Despite challenges such as anticipated lower US volumes due to store closures at a specific retail pharmacy customer, the company is maintaining its as-reported revenue guidance due to favorable foreign exchange movements. Adjusted gross margin guidance was slightly lowered to account for incremental tariffs and reduced revenue expectations, yet adjusted operating and EBITDA margin guidance was raised due to effective cost management and restructuring initiatives. The restructuring plan, aimed at driving efficiencies, is expected to result in cost savings of $7 million to $8 million in the second half of fiscal 2025, with annualized savings projected around $15 million. The company remains committed to its strategic priorities of strengthening its core business, expanding its product portfolio, and increasing financial flexibility.

Embecta Corporation Corporate Events

Business Operations and StrategyFinancial Disclosures

Embecta Unveils Strategy at Analyst and Investor Day

Positive

May 22, 2025

On May 22, 2025, Embecta Corp. hosted its first Analyst and Investor Day to present its phased strategy for value creation and long-term financial plans. The company aims to strengthen its core insulin business, expand its product portfolio, and increase financial flexibility. Embecta reaffirmed its fiscal year 2025 financial guidance and announced a long-range financial plan through fiscal 2028, focusing on maintaining revenue, achieving an adjusted operating margin, and reducing debt. These initiatives are designed to position Embecta for sustainable growth in the evolving healthcare landscape.

The most recent analyst rating on (EMBC) stock is a Sell with a $20.00 price target. To see the full list of analyst forecasts on Embecta Corporation stock, see the EMBC Stock Forecast page.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.