Convatec Group Plc: A potential clearing event is in sight

研报英文原文证据摘录

Convatec Group Plc: A potential clearing event is in sight

(USD)

estimates suggesting 2027 inflation could run at 4–5%, implying roughly a 40bp drag

From To % ch Cons.

on margins: we believe this is manageable, given our forecast for 7.5% organic growth 12/26E 0.20 0.20 0 0.20

and the associated operating leverage, leaving Convatec well positioned to achieve its 12/27E 0.24 0.23 -2 0.22

24.0% margin target. 12/28E 0.27 0.26 -2 0.25

2027 still set to be a banner year Graham Doyle

Analyst

We believe 2027 is still set to be a stand-out year for Convatec, with new products/ graham.doyle@ubs.com

contracts mechanically lifting organic revenue growth to 7.5%. This should yield +44-20-7568 2587

c.250bp of operating leverage meaning even with reinvestment and above normal

Kavya Deshpandeinflation headwinds, Convatec can expand margins by 100bp to 24.0%. This should

drive 16% EPS growth or the 4th straight year of double digit EPS growth, on our kavya.deshpande@ubs.com

estimates. +44-20-7567 8515

Thyra Lee

Forecast changes

We make minor changes to our assumptions, meaning we lower our EPS forecasts by 0- thyra.lee@ubs.com

2% for 2026-29E. +44-20-7568 0083

Valuation, reiterate Buy on £3.75/share PT (c70% implied upside)

We reiterate our DCF-derived PT of £3.75/share on an unchanged WACC of 7.9% and

unchanged TG of 2.0%. This implies c.70% upside potential from current levels, though

we think the implied 2027E PE of 21.0x is well supported representing only a

c.15% premium to its 10-year average PE and a 10% premium to its 5-year average PE.

Highlights (US$m) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E

Revenues 2,142 2,289 2,439 2,577 2,768 2,961 3,159 3,367

EBIT (UBS) 432 485 544 592 664 733 787 845

Net earnings (UBS) 274 308 345 395 457 511 555 597