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ConvaTec Group PLC ADR - Stock Quote CNVVY

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Morningstar's ConvaTec Group PLC ADR Stock Analysis

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ConvaTec Starts 2022 in Strong Fashion and Hints at Strategic Ambitions; Shares Remain Undervalued

Debbie S. Wang Senior Equity Analyst

Analyst Note

| Debbie S. Wang |

ConvaTec posted abbreviated revenue results for the first four months of 2022 that put the firm on track to meet our full-year expectations, and we’re leaving our valuation for U.S. shares unchanged, but slightly raising our fair value estimate for local U.K. shares to reflect underlying changes in foreign exchange. Organic 6% consolidated revenue growth was driven by advanced wound care, continence care, and infusions sets. Not surprisingly, ostomy growth remains mired in the low single digits, and will likely remain in that range considering the flow of new patient discharges ultimately determines the pace of adoption. We remain confident in the structural integrity of ConvaTec’s narrow economic moat, which stems from intangible assets as well as switching costs for patients. Though the pandemic exerted pressure on ConvaTec’s non-pandemic related business—including advanced wound care, ostomy, and continence care—the firm is already showing signs of resumption in growth as non-COVID surgical procedures have begun to return following the omicron surge.

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ConvaTec Group PLC ADR's Company Profile

Business Description

Originally spun out of Bristol-Myers Squibb, ConvaTec designs, manufactures, and markets advanced wound care, ostomy, continence care, and infusion sets for the acute-care hospital and chronic-care home settings. Advanced wound care and ostomy are the largest divisions, accounting for 33% and 30% of total revenue, respectively. Continence care contributes 21% of revenue and infusion sets 15%.

23 Forbury Road, 3 Forbury Place
Reading, RG1 3JH, United Kingdom
T +44 1189528100
Sector Healthcare
Industry Medical Instruments & Supplies
Most Recent Earnings
Fiscal Year End Dec 31, 2022
Stock Type
Employees 10,461