Barclays cuts Coloplast stock rating, lowers price target

On Monday, Barclays (LON:BARC) analysts downgraded Coloplast (CSE:COLOb) A/S (COLOB:DC) (OTC: CLPBY) stock rating from Overweight to Equalweight and reduced the price target to DKK750.00 from DKK1,010.00. The downgrade follows a series of negative developments for the medical device company, including execution issues and a recent profit warning. The company currently trades at a P/E ratio of 30.14 and an EV/EBITDA multiple of 20.27, indicating a relatively high valuation despite recent challenges.

Last week, Coloplast issued a profit warning, indicating challenges in the company’s performance. This announcement was compounded by the unexpected departure of the company’s CEO on Monday. The stock has fallen 12.23% over the past week and is currently trading near its 52-week low of $9.67. Barclays analysts cited these events as reasons for the downgrade, expressing concern over the increasing uncertainty surrounding Coloplast’s leadership and mid-term targets.

Despite acknowledging Coloplast’s high-quality product portfolio and its historically depressed valuation, Barclays analysts remain cautious. The uncertainty around the company’s future direction, particularly with regards to its Interventional Urology business, is seen as a potential persistent overhang on the stock.

Barclays mentioned the upcoming September Capital Markets Day (CMD) as a potential opportunity for Coloplast to provide strategic clarity. The analysts suggested that investors might welcome an exit from the Interventional Urology business, which could be discussed during the CMD.

In light of the recent second-quarter results and heightened uncertainty, Barclays has revised its estimates for Coloplast, resulting in a 5-7% reduction in numbers. The new price target of DKK750.00 reflects these adjustments and the downgrade to an Equalweight rating.

In other recent news, Coloplast A/S reported several significant developments impacting its stock ratings and future outlook. Deutsche Bank (ETR:DBKGn) downgraded Coloplast’s stock from Buy to Hold, reducing the price target to DKK 708 from DKK 1,020. This decision follows Coloplast’s announcement of lower-than-expected profitability improvements due to challenges from acquisitions and market uncertainties, particularly in the Chinese ostomy market. Meanwhile, JPMorgan upgraded Coloplast from Underweight to Neutral, with a price target of DKK 700, reflecting a reassessment of the company’s valuation amid operational difficulties and competitive pressures. JPMorgan believes that the current share price now adequately represents the company’s value, although they remain cautious about near-term growth prospects.

Additionally, RBC Capital Markets upgraded Coloplast from Sector Perform to Outperform, raising the price target to DKK 940. The firm cited a more favorable risk-reward balance and anticipated improvements in profit margins as reasons for the upgrade. RBC Capital Markets highlighted potential long-term earnings growth driven by reimbursement reforms and innovations like the Heylo Ostomy leak detection device. These recent developments collectively reflect a mixed outlook for Coloplast, with varying assessments from analysts on the company’s future performance and market position.

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