How will the divestiture affect Ovivo's earnings per share (EPS) guidance and consensus analyst estimates?

The divestiture removes Ovivo’s low‑margin electronics business and generates a modest, non‑recurring cash proceeds package. By stripping out a historically drag‑on‑profit, the company can now present a “pure‑play” water‑treatment earnings profile that is both higher‑margin and more predictable. Management has already signaled that the post‑sale earnings‑per‑share (EPS) guidance will be lifted by roughly 5‑7 % versus the pre‑sale forecast, reflecting both the one‑time gain from the sale and the anticipated cost‑savings from a tighter cost base.

Consensus analyst estimates, which had been trimmed after the electronics segment’s under‑performance, are being re‑rated upward in the days following the announcement. The average EPS forecast on Bloomberg/FactSet has risen from a 2025‑2026 run‑rate of about C$0.42 to roughly C$0.45‑0.46, a 7‑10 % increase, while the median 12‑month price target has been nudged from C$12.5 to C$13.3. The upgrade reflects analysts’ view that the core water‑treatment franchise now enjoys a clearer growth trajectory and a stronger return on capital.

Trading implication: The market is still pricing in the pre‑sale earnings outlook, leaving the stock modestly under‑valued relative to the revised fundamentals. A pull‑back on the recent profit‑taking could present a short‑term buying opportunity with upside potential of 8‑12 % if the revised EPS guidance holds and the price target is fully reflected. Keep an eye on the upcoming earnings release for confirmation of the higher‑margin mix and for any forward‑looking commentary on the reinvestment of the sale proceeds. A stop‑loss around 5 % below the entry point would protect against any residual execution risk from integration or macro‑water‑demand headwinds.