Coloplast Sees Improvements in Urology and Wound Care in Third Quarter; No Change to Our FVE

Despite considerable foreign exchange headwinds, Coloplast posted laudable fiscal third-quarter results that featured strength in interventional urology and wound care as non-pandemic procedures resumed. The firm remains closely on track with our expectations for the year on the top and bottom lines, and we’re leaving our fair value estimate unchanged. Coloplast has benefited from its chronic care businesses, including ostomy and continence care, which were relatively less affected by the pandemic through 2020. Similar to the insulin pump and continuous glucose monitor markets, ostomy and continence care played the role of ballast for Coloplast, while steep declines were seen in the smaller wound care and urology segments when shelter-at-home orders were place last year. Now that trend has been reversing itself in 2021. With the rising transmission of the Delta variant, we think there may be some peripheral pressure on elective procedures through the rest of this calendar year. But, the impact on Coloplast valuation is likely to remain immaterial. Additionally, we think Coloplast’s narrow moat remains solid through the disruption of COVID-19. The firm continues to leverage its patient-focused culture and create meaningful innovation, thereby solidifying its competitive advantage. We have yet to see rival ConvaTec exert much competitive pressure on Coloplast.