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On Thursday, JPMorgan analyst Anchal Verma upgraded the stock rating of Coloplast (CSE:COLOb) A/S (COLOB:DC) (OTC: CLPBY) from Underweight to Neutral, setting a price target of DKK700.00. The adjustment reflects a new valuation of the company after considering the challenges it has faced in recent years. The healthcare equipment manufacturer, with a market capitalization of $24 billion, has maintained impressive gross margins of 67.5% despite recent headwinds.
Coloplast’s stock is currently trading at 25 times its forecasted FY26 earnings per share (EPS), which is close to its lowest multiples in a decade. This valuation represents a 47% decrease since 2020. According to Verma, this decline accounts for the operational difficulties Coloplast has encountered, including diminishing returns, shrinking margins, and intensifying competition in the market. InvestingPro data shows the stock trading near its 52-week low of $10.48, with technical indicators suggesting oversold conditions. For deeper insights into Coloplast’s valuation metrics and 13 additional ProTips, consider an InvestingPro subscription.
JPMorgan believes that while there may not be a reversal to previous valuation multiples, the current share price adequately represents the company’s value. The firm anticipates that the risks associated with earnings and valuation are now more evenly distributed, leading to the upgrade to a Neutral rating. The company has demonstrated long-term stability, maintaining dividend payments for 32 consecutive years, with a current yield of 2.9%.
Despite the upgrade, JPMorgan maintains a cautious outlook on the potential for Coloplast’s stock to appreciate further. Verma indicates that for a more positive stance to be taken on the company, there would need to be signs of earnings improvements that could justify a higher premium on the stock. However, at this time, JPMorgan sees limited near-term catalysts that might contribute to an increase in the stock’s current valuation.
In comparison, JPMorgan continues to show a preference for Convatec, citing its lower forecasted FY26 earnings multiple of 17 times and the potential for earnings revisions and further valuation multiple expansion.
In other recent news, Coloplast A/S has been the subject of varying analyst assessments. RBC Capital Markets upgraded Coloplast’s stock rating from Sector Perform to Outperform, increasing the price target to DKK940.00. The upgrade is based on the resolution of operational challenges and a positive outlook for profit margins, with potential earnings growth driven by reimbursement reforms and innovations like the Heylo Ostomy leak detection device. Meanwhile, Morgan Stanley (NYSE:MS) maintained an Underweight rating on Coloplast, adjusting the price target downward to DKK725.00 due to limited visibility on urology sales. This adjustment comes as Coloplast concludes its Strive25 initiative, with a focus on growth beyond 2025. The company’s recent acquisitions, including Intibia for Urology, are central to its growth strategy, although the sales potential for Intibia remains uncertain. A critical study is underway, with results expected by mid-2025, which will be pivotal for assessing future sales outcomes. Investors are closely monitoring these developments as Coloplast aims to strengthen its position in the medical device industry.
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