Medical products and technology company Convatec CTEC is currently leading the FTSE 100 after its share price soared by over 20% at market open.
The wound care specialist raised its guidance for 2024 following better-than-expected revenue growth.
Organic revenue growth for the first 10 months of 2024 to the end of October reached 7.7%, beating prior expectations of growth of between 5% and 7%.
Shares are currently trading 20.3% higher at £2.60, below Morningstar’s Fair Value Estimate of £2.71. Year to date, Convatec stock is up 7.78%.
Why Are Convatec Shares Surging?
This morning Convatec raised its overall revenue outlook for 2024 to between 7.25% and 8% after its adjusted operating profit margins jumped 21.5%.
Convatec attributes its improved revenue growth to the diversity of its product portfolio, new product launches, and improved operational efficiency.
Divisions including Advanced Wound Care and Continence Care are helping to drive growth at the business.
Key Morningstar Metrics For ConvaTec CTEC
• Economic Moat: Narrow
• Fair Value Estimate: £2.71
• Morningstar Rating: 4 stars
• Sector: Healthcare
• Morningstar Uncertainty Rating: Medium
• Forward Dividend Yield: 2.28%
In August, Debbie Wang, senior equity analyst at Morningstar, was pleased by Convatec’s results for the first half of 2024, which in her view displayed “continued improvement.”
“The firm remains on track to meet our full-year expectations thanks to its focus on operations, commercialization of pipeline products, and emphasis on chronic care products, Convatec has steadily and incrementally pushed growth and profitability higher,” she said.
“We’ve long believed that Convatec’s switching costs among end users and the potential to introduce novel products were enough to provide the firm with a narrow moat. Under chief executive Karim Bitar, the firm has begun to realize that potential and make good on its moat.”
Morningstar’s Fair Value Estimate for the business sits at £2.71.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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