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Highlights

  • CTEC shares rose 11.98% to GBX 254.20 following the FY25 results announcement.
  • Adjusted operating margin increased to 22.3%, while adjusted EPS grew 16% year-on-year.
  • Brokers issued Buy ratings with target prices ranging from GBX 310 to GBX 325.

Shares in ConvaTec Group PLC (LSE:CTEC) climbed 11.98% to GBX 254.20 on 24 February after the medical products manufacturer reported full-year 2025 results in line with guidance and outlined continued double-digit earnings growth for 2026. Multiple Buy ratings came from brokers, with target prices indicating further upside from current levels.

Revenue Growth Across All Categories

For FY25, ConvaTec delivered organic revenue growth of 6.4% excluding InnovaMatrix®, compared with 6.8% in 2024. Including InnovaMatrix®, organic growth was 4.8%, while reported growth reached 6.5%.

Performance was broad-based across divisions:

  • Advanced Wound Care (AWC) grew 4.1% excluding InnovaMatrix®, supported by ConvaFoam™ and Aquacel® Ag+ Extra™.
  • Ostomy Care (OC) rose 4.5%, aided by new patient starts and the Esteem Body™ launch.
  • Continence Care (CC) increased 6.6%, driven by US volume growth and expanding international sales.
  • Infusion Care (IC) recorded 12.5% growth, reflecting demand for infusion sets in diabetes and non-diabetes therapies.

InnovaMatrix® revenue totalled USD 69 million, down 30% year-on-year and representing less than 3% of group revenue.

Margin Expansion and Earnings Growth

Adjusted operating margin improved by approximately 110 basis points to 22.3%. Adjusted diluted earnings per share increased 16.0% year-on-year.

The company generated significant cash flow, enabling reinvestment and shareholder returns. During the year, ConvaTec allocated:

Management outlined expectations for further margin expansion in FY26, guiding to adjusted operating margin of at least 23.0%, including around 20 basis points of incremental tariff costs in the first half.

FY26 Outlook and Medium-Term Targets

For FY26, ConvaTec expects:

  • Organic revenue growth (excluding InnovaMatrix®) of 5–7%, weighted to the second half
  • InnovaMatrix® revenue of approximately USD 20 million, representing a 2% revenue headwind
  • Double-digit adjusted EPS growth
  • Capital expenditure of USD 200–USD 230 million, including growth capex of USD 135–USD 165 million
  • Approximately 100% equity cash conversion

Looking beyond 2026, the Group upgraded its medium-term organic revenue growth target to 6–8% annually from 2027, compared with the previous 5–7% range. It also set a target adjusted operating margin of 24–26% by 2027, alongside sustainable double-digit EPS growth and free cash flow expansion.

Broker Ratings Signal Further Upside

Following the results, several investment banks reiterated positive recommendations:

  • Stifel Europe maintained a Buy rating with a target price of GBX 315.
  • Panmure Liberum issued a Buy rating with a GBX 310 target.
  • Jefferies set a Buy rating with a target price of GBX 325.

Each target sits above the current share price of GBX 254.20, suggesting expectations of additional gains.

ConvaTec’s FY25 performance showed revenue growth across all divisions, margin expansion and double-digit earnings growth. With upgraded medium-term revenue targets and continued investment in innovation and capacity, the company has set out expectations for further EPS growth in 2026. Broker Buy ratings and higher price targets indicate market confidence in the Group’s outlook following the share price rally.

Frequently Asked Questions (F&Q)

Why did CTEC shares rise nearly 12%?
The increase followed FY25 results showing 6.4% organic revenue growth (excluding InnovaMatrix®), a 110bps margin improvement and 16% growth in adjusted EPS.

What is ConvaTec’s margin target for 2026?
The company expects adjusted operating margin of at least 23.0% in FY26.

What are brokers’ price targets for CTEC?
Stifel Europe set GBX 315, Panmure Liberum GBX 310, and Jefferies GBX 325.