Analyst Note| Debbie S. Wang |
Advanced Medical Solutions has struggled with both the pandemic and the uncertainty of any potential Brexit deal throughout this year. We’re modestly lowering our fair value estimate to GBX 308 per share, down from GBX 335, after adjusting our assumptions for ongoing challenges with COVID-19 in the first half of 2021 before there is widespread vaccination. Even with the slight haircut to the intrinsic value, shares continue to trade at an attractive discount, in our view. We suspect shares remain depressed thanks to the bumpiness of AMS’ performance of late, driven by apprehension around the shape of Brexit and COVID-19. From our longer-term perspective, we’ve seen little to change our view of the firm’s narrow economic moat and expect both its branded products mainly used in surgical suites, as well as its unbranded wound care business, should see a resumption in growth once the pandemic recedes and procedure volume for non-pandemic patients normalizes.