ConvaTec Group PLC 

ConvaTec Group PLC (LSE: CTEC) is an FTSE 100 index-listed technology and medical products Company specializing in wound treatment, continence and critical care, infusion devices, and ostomy care. This Report covers the Investment Highlights, Conclusion, and Recommendation on the stock. This Report covers the Investment Highlights, Conclusion, and Recommendation on the stock.

Investment Rationale – Sell at GBX 244.63

• Resistance near Current levels: CTEC’s stock price almost touched the Resistance (R1) which was stated in the previous report on 25 April 2023, and might witness some sell-off from the current levels. Considering the market conditions and the price action, it is prudent to exit the stock, as the prices might pull back from these levels.
• Sluggish Profitability Margins: In H1 FY23, the Gross margin of CTEC was 56.1% against the industry median of 73.3%, and the EBITDA margin declined to 21.7% in the reported period (H1 FY23) as compared to the industry median of 22.4%. Also, the net margin slipped to 5.3% in H1 FY23 versus the industry median of 10.6%.
• Declining liquidity ratios: The group’s quick ratio for H1 FY23 was reported at 0.94x, which is lower than the industry median of 1.08x. Further, CTEC’s current ratio declined to 1.70x during H1 FY23, against the industry median of 2.19x.

Share Price Chart  

Conclusion

Based on the notional gains, macroeconomic challenges, and price action stance, a "SELL" recommendation on ConvaTec Group PLC (LSE: CTEC) has been given at the current market price of GBX 244.63 (as of 14 December 2023, 09:30 AM GMT).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 14 December 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.