Coloplast Wraps Up Fiscal Year in Strong Fashion; Holding Steady on Our Fair Value Estimate

Coloplast closed its fiscal year hitting our full-year projections nearly on the nose, and we’re leaving our fair value estimate unchanged. Though the first half of fiscal 2020-21 was more seriously hindered by the pandemic and fewer new patients, Coloplast posted impressive results in the fiscal fourth quarter, featuring 10% constant-currency revenue growth year over year, which outpaced the 8% that management typically aims for (although management's outlook was tempered to 7% top-line constant-currency growth for 2020-21). Similarly, Coloplast has enjoyed relative stability in its cost structure, even when viral transmission put more pressure on nonpandemic surgical procedures in calendar 2020. We remain confident in the firm’s switching costs and intangible assets that support its narrow economic moat. Investments in higher-volume manufacturing facilities in Costa Rica position the firm well to hold down manufacturing costs through the longer term, from our perspective.