ConvaTec Posts First-Quarter Growth Slightly Ahead of Our Expectations; No Change to Our FVE

Narrow-moat ConvaTec reported first-quarter revenue results that slightly exceeded our expectations, especially in advanced wound care. However, this wasn’t enough to materially move the needle on our valuation, and we’re holding steady on our fair value estimate. While the previous management team had made a hash of execution, we’ve long been fans of ConvaTec’s underlying businesses, which we believe benefit from structural moat sources, including switching costs. Under new CEO Karim Bitar, ConvaTec seems to be finally making good on its potential, and first-quarter results suggest the long-awaited turnaround is underway.