Fresenius Medical Care: 2025 Margin Aspirations Depend on Medtech Segment

At its investor day, Fresenius Medical Care provided more insights into its margin improvement goals that surprisingly depend on its medical technology (care enablement) segment, which was decimated during the pandemic. The firm's margin goals look achievable to us, and we think its competitive positions in its two major businesses remain intact. However, we would highlight that any further missteps by (new) leadership on its path back to economic profitability may cause us to rethink our narrow moat rating, which currently accounts for about 7% of intrinsic value. Even if that rating change were made, though, Fresenius shares would still appear significantly undervalued.