ConvaTec Delivered More Turnaround Progress in 2022; No Change to Our Fair Value Estimate

ConvaTec wrapped up 2022 in solid fashion, and we’re comfortable that the firm has strengthened its foundation, which sets the stage for improved innovation and operations despite nagging challenges with rising input costs and wages. With few surprises in fourth quarter, the firm nearly matched our estimates, and we’re leaving our fair value estimate unchanged. We’ve also seen little to change our view of ConvaTec’s narrow economic moat and believe the underlying user switching costs, especially in ostomy and continence care, bought the company time to nudge innovation into the product pipeline. The firm has begun to reap the rewards of that innovation through the adoption of three new products in 2022.