ConvaTec: Wall Street bank thinks you may bag a bargain

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A Wall Street bank has upgraded its call on med-tech specialist ConvaTec Group PLC (LSE:CTEC), judging the margin concerns dogging the performance of the stock to be overdone.


JP Morgan has moved to ‘overweight’ on the stock with a price target of GBP2.72, which is around 20% ahead of where the shares are currently trading.


“The revision of 2021 guidance at first-half results understandably led to some concerns over the trajectory of margins – with the consensus now forecasting an underlying contraction in 2022,” the bank said in a note to clients.


“We see this as an overreaction, and we are comfortable forecasting around a 20% operating margin in 2022 (consensus at is around 19.2%).


Longer-term, the potential of the business does not look to be reflected in the current price.


We see the weakness post H1 results as offering an attractive entry point for a longer-term holding as the credibility continues to grow of the turnaround on the top-line and margin.”


Early afternoon the shares were up 2% at GBP2.27.

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