Image source: Pixabay

Highlights

  • Convatec’s reported operating profit and adjusted net profit marked a YoY growth of 26.7% and 6.7%, respectively in FY23
  • The company forecasts a 5-7% growth in organic revenue for FY24
  • The company aims for a minimum adjusted operating profit margin of 21% on a constant currency basis by 2026 or 2027

Convatec Group PLC (LSE: CTEC) is an FTSE 100-listed, London-based medical products and technologies firm. It specializes in offering products and services related to advanced wound care, ostomy care, continence solutions, and infusion care. The company has a market capitalization of GBP 5,062.51 million.

In the fiscal year 2023, the company’s organic revenue experienced a notable increase of 7.2%, driven by strong performances in antimicrobials and enriching wound biologics. Convatec's ostomy products saw a 6% rise, particularly excelling in global emerging markets. This growth was further fueled by outstanding customer service, sustained demand for infusion sets, and increased reimbursement pricing in the US, all of which contributed to a rapid acceleration in organic revenue. Additionally, free cash flow to equity surged to USD 228 million in FY23, marking a significant increase compared to the USD 105 million recorded in FY22.

Likewise, the company’s reported operating profit and adjusted net profit marked a YoY growth of 26.7% and 6.7%, respectively in FY23.

Recent business update

As per the company’s recent trading update dated 16 May 2024, its organic revenue for the four months ended 30 April 2024 surged by 6.5%. It was 5.2% on a reported basis and 5.4% on a constant currency basis.

Company outlook

The company is optimistic about its outlook and forecasts a 5-7% growth in organic revenue for the fiscal year 2024. This growth is expected to be primarily fueled by improvements in commercial execution and a robust new product pipeline. Additionally, the company aims for a minimum adjusted operating profit margin of 21% on a constant currency basis by 2026 or 2027. Furthermore, over the same period, CTEC anticipates double-digit growth in both free cash flow to equity and earnings per share (EPS).

Top 10 Shareholders

The top 10 shareholders of CTEC together account for approximately 47.87% of the total shareholdings in the company. Novo Nordisk Foundation holds the maximum number of shares with around 19.29% shareholding, followed by Artisan Partners Limited Partnership with around 4.78% shareholding, as depicted in the chart below:

Stock performance

The share price of CTEC has declined by about 3.22% in the last one month and over the last six months, it has surged by around 12.77%. The stock has a 52-week low and 52-week high of 195.10 & GBX 295.20, respectively. At present, it is trading higher than the average of its 52-week high-low.

Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference data for all price data, currency, technical indicators, support, and resistance levels is 05 June 2024. The reference data in this report has been partly sourced from EODHD/Others.