Avanos Medical's Transformation Efforts and Aggressive M&A Strategy Expected to Drive Price Growth

Avanos Medical (AVNS) is undervalued due to its international expansion, aggressive M&A strategy, and presence in growth markets like neonatal enteral feeding devices. The company's transformation efforts are expected to drive inorganic growth, pushing the stock price up.

Avanos Medical, Inc. (NYSE: AVNS) has been making significant strides in its international presence and M&A strategy, positioning itself as an undervalued investment opportunity in the medical technology sector. The company's focus on growth markets such as neonatal enteral feeding devices and its recent appointment of a new CFO with M&A expertise suggest a promising future for inorganic growth.

International Expansion and Market Growth
Avanos Medical has been expanding its international footprint, particularly in Europe, Asia, and Latin America. This expansion, coupled with the company's strong presence in North America, could substantially accelerate its total revenue growth. The neonatal and preterm infants enteral feeding devices market, for instance, is expected to grow at an annual rate of 7.5% from 2026 to 2033, offering a significant growth opportunity for AVNS Avanos Medical: After Transformation Efforts, I Expect Inorganic Growth To Push The Price Up^[1].

Aggressive M&A Strategy
The appointment of a new CFO with a track record in M&A activities at Newell Brands and Equity Pacific Partners indicates AVNS's intent to pursue an aggressive acquisition strategy. The company's solid balance sheet, with around $1 billion in total assets and $90 million in cash, provides the financial flexibility needed to execute these acquisitions. Additionally, the company's current net debt/EBITDA ratio of 0.2x suggests a strong ability to absorb new debt if necessary Avanos Medical: After Transformation Efforts, I Expect Inorganic Growth To Push The Price Up^[1].

Transformation Efforts and Operating Margins
Avanos Medical has been undergoing various transformation processes and divestitures, which are expected to enhance its operating margins and free cash flow margins. The company's three-year restructuring program, which included the divestiture of the RH, and its plans for new manufacturing and operational initiatives in 2025, are likely to have a positive impact on future financial statements Avanos Medical: After Transformation Efforts, I Expect Inorganic Growth To Push The Price Up^[1].

Valuation and Stock Repurchases
Despite its promising prospects, AVNS is currently trading at around $11 per share, significantly lower than its historical peak of over $59 per share. The company's price/book value per share is less than 1x, indicating substantial undervaluation. Additionally, ongoing stock repurchases, such as the recent approval of a new repurchase of up to $25.0 million, could further boost the stock's demand Avanos Medical: After Transformation Efforts, I Expect Inorganic Growth To Push The Price Up^[1].

Conclusion
Avanos Medical's international expansion, aggressive M&A strategy, and transformation efforts present a compelling case for undervaluation. With a strong balance sheet, experienced leadership, and growth opportunities in key markets, AVNS appears to be a solid investment opportunity for those seeking exposure to the medical technology sector.

References
Avanos Medical: After Transformation Efforts, I Expect Inorganic Growth To Push The Price Up^[1] https://seekingalpha.com/article/4827897-avanos-medical-after-transformation-efforts-i-expect-inorganic-growth-to-push-the-price-up