ConvaTec Group – FTSE100 medical solutions group’s Interims tomorrow will highlight its ongoing growth, its shares 239p, broker’s TP 310p

28.07.2025

Tomorrow morning, Tuesday 29^th July, will see the £5.4bn capitalised ConvaTec Group (LON:CTEC) announce its Interim Results for the half-year to end-June, they may not show any surprises, but they should help to showcase the underrating of its shares.

The Business

It was in the 1960’s that Dr James Chen researched masses of formulations that led to the invention of the first hydrocolloid medical adhesive for use in dental surgery, for which it was granted a patent in 1967.That technology brought about the group’s first product, the Stomahesive® skin barrier, launched after Convatec was founded in 1978 (as a division of E.R. Squibb & Sons, Inc, later part of Bristol Myers Squibb).

Stomahesive® revolutionised ostomy care and established its reputation as an innovator of skin adhesives.

The product portfolio subsequently grew to include a complete ostomy care line and advanced wound care line, including the AQUACEL® and Hydrofiber® Technology.

ConvaTec has evolved into one of the world’s leading medical products and technology companies.

The group’s products provide a range of clinical and economic benefits including infection prevention, protection of at-risk skin, improved patient outcomes and reduced total cost of care.

The business markets and sells solutions and services in four categories: Advanced Wound Care, Ostomy Care, Continence Care and Infusion Care.

Advanced Wound Care - #3 globally

Advanced dressings for the management of acute and chronic wounds resulting from ongoing conditions, such as diabetes, and acute conditions resulting from traumatic injury and burns.

Ostomy Care - #3 globally

Devices, accessories and services for people with a stoma (a surgically created opening where bodily waste is discharged), commonly resulting from causes such as colorectal cancer, bladder cancer, inflammatory bowel disease and trauma.

Continence Care - #1 in the US

Products and services for people with urinary continence issues related to spinal cord injury, neurological disease, prostate enlargement or other causes.

Chronic care markets are driven by global healthcare megatrends.

Infusion Care - #1 globally

Disposable infusion sets used with insulin pumps for diabetes or with continuous infusion treatments for conditions such as Parkinson’s Disease.

The group has over 10,000 people, selling products and services in almost 90 countries, with an extensive network of wholesalers and distributors.

Management Comment

With the end-May Trading Update, CEO Karim Bitar stated that:

"Convatec delivered a strong start to the year with continued broad-based organic revenue growth across all our categories.

We are on track to deliver our financial targets.

Our FISBE strategy continued to drive our performance, supported by our strongest-ever innovation pipeline and ongoing simplification and productivity initiatives.

We are focused on providing high quality chronic care solutions for customers, patients and healthcare professionals.

Looking ahead, we are well-positioned to consistently deliver strong revenue growth and double-digit adjusted EPS growth."

The Equity

There are some 2.05bn shares in issue.

The larger holders include Novo Holdings A/S (19.29%), Artisan Partners (4.78%), Capital Research & Management (4.64%), Pelham Capital (4.56%), Black Creek Investment Management (4.00%), BlackRock Investment Management (2.63%), FIL Investments International (2.61%), Fidelity Management & Research (2.59%), Schroder Investment Management (2.52%) and Massachusetts Financial Services (2.37%).

Analyst Views

There are around 17 analysts following the company, 14 of whom rate the shares as a BUY, while the other 3 are neutral on the stock – there is an average consensus Target Price of 317p for the shares.

The average across the analysts suggests estimates for the current year to end-December to show revenues of $2,414m ($2,289m), with adjusted operating profits of $540m, and adjusted earnings per share of 16.38c.

For next year the analysts average is $2,560m sales, $601m profits and 19.89c per share.

In 2027 the estimates suggest $2,724m turnover, $665m profits and 22.48c earnings.

Analyst Sam England, at Berenberg, reckons that, given the momentum so far in 2025,

the shares are trading on an undemanding valuation, stating that:

“The company entered 2025 with good momentum and will also benefit from delays to local coverage determinations in wound care.

As a result, we think that the set-up for 2025 looks interesting and that growth could outperform consensus expectations.”

At Panmure Liberum their analysts state that CTEC remains one of its preferred ways to play the MedTech sector, while noting that the company has been transformed over the last few years and has been rehabilitated in the eyes of investors.

In My View

Convatec has leading positions in four chronic care categories, with market growth rates varying between 4% and 8% p.a.

Tomorrow’s Interims statement will help to show just how well its Management has progressed with the group’s Transformation Plan – with a drive to get margins up to 25% - which in turn will help to boost the group’s earnings.

The shares, which enjoy a healthy daily dealing turnover, have been up to 311p in the last year, but are now just 239p.

An encouraging piece of corporate news tomorrow could help to speed them back up towards new All-Time Highs.