Ansell faces significant earnings risk from currency movements (particularly EURUSD) and key raw material inputs. Raw materials such as latex form a high proportion of costs and are highly volatile and difficult to forecast. M&A may provide a positive offset given ANN's balance sheet capacity. If the impact on the company from any of these factors proves to be greater than we anticipate, the stock will likely have difficulty achieving our target price. However, should they be less than anticipated, the stock could trade above our target price.
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