ConvaTec Posts Solid Third-Quarter Revenue Growth; No Change to Our Fair Value Estimate

All in all, ConvaTec saw solid third-quarter sales across most product segments that were consistent with our expectations, and we’re leaving our fair value estimate unchanged for now. Though ConvaTec faced foreign-currency headwinds, organic growth across the key segments remained respectable, with advanced woundcare up 5%, and both ostomy and continence and critical care up 2% versus the prior-year period, which itself was fairly solid. This leaves us comfortable with the progress management is making in improving execution. We see little to shift our thinking on ConvaTec’s narrow economic moat and think there’s the potential for newly acquired Cure Medical to reinforce ConvaTec’s intangible assets in the continence-care category with its hydrophilic intermittent catheters.