Multiple Factors Pulled Down Stevanato Group S.p.A. (STVN) Shares in Q2
Baron Funds, an investment management company, released its “Baron Discovery Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund (Institutional Shares) declined 7.78% underperforming the 2.92% return for the Russell 2000 Growth Index. The lion’s share of negative attribution and 6.52% of negative performance of the fund during the quarter were attributed to the ten worst-performing equities. The firm believes downward movements are more technically tied to macroeconomic issues and the trading environment and could quickly revert. In addition, please check the fund’s top five holdings to know its best picks in 2024
Baron Discovery Fund highlighted stocks like Stevanato Group S.p.A. (NYSE:STVN) in the second quarter 2024 investor letter. Stevanato Group S.p.A. (NYSE:STVN) designs and distributes products and processes to offer integrated solutions for the biopharma and healthcare industries. The one-month return of Stevanato Group S.p.A. (NYSE:STVN) was -5.00%, and its shares lost 42.50% of their value over the last 52 weeks. On August 22, 2024, Stevanato Group S.p.A. (NYSE:STVN) stock closed at $18.62 per share with a market capitalization of $5.081 billion.
Baron Discovery Fund stated the following regarding Stevanato Group S.p.A. (NYSE:STVN) in its Q2 2024 investor letter:
"We do have investments with positive exposure to GLP-1 trends, but the near-term macro environment has led to setbacks. Stevanato Group S.p.A. (NYSE:STVN) manufacturers specialized glass vials and cartridges used for injectable drugs. The company is a market leader in these high value components. It is building out manufacturing capacity for what we believe will be significant volumes of components for GLP-1 drugs. Unfortunately, while investors wait for that capacity to come online, the company had excess inventory of other products in its distribution channel, leading to a 4.6% reduction in full-year 2024 revenue guidance. This modest reduction in guidance and the return of Franco Stevanato as CEO caused shares to drop 42.8%. Currently, shares trade at close to their lowest Enterprise Value to Sales (EV/Sales) multiple in years (about 4.3 times compared to an average of 5.5 times). Enterprise value combines the market value of the stock with net debt on the balance sheet to give a representation of the cost to fully purchase the company. In addition, the stock trades at only 13 times next year’s cash flow (which we believe will double from 2024 to 2028 as new capacity ramps up). The company is most of the way through the capital expenditure needed to ramp up its plant capacity. Therefore, we believe that as inventory issues ease over the next couple of quarters and new products launch, we will see a nice recovery. Chaos equals opportunity."
A scientist in a laboratory observing a drug delivery system through a microscope.
Stevanato Group S.p.A. (NYSE:STVN) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 13 hedge fund portfolios held Stevanato Group S.p.A. (NYSE:STVN) at the end of the second quarter which was 15 in the previous quarter. The first quarter revenue of Stevanato Group S.p.A. (NYSE:STVN) reduced 1% year-over-year to €236 million. While we acknowledge the potential of Stevanato Group S.p.A. (NYSE:STVN) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Stevanato Group S.p.A. (NYSE:STVN) and shared Conestoga Capital Advisors' views on the company. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.