Coloplast (COLOB:DC) A/S (OTC: CLPBY) Receives Neutral Rating from Citi with Price Target of DKK930.00
In an exclusive report following a discussion with Coloplast's CFO, Anders Lonning-Skovgaard, during Citi's 2024 healthcare bus trip, Citi has maintained its Neutral rating on Coloplast. The company's successful uptake of the Luja male product and anticipated growth for the female version in the next 12 months were highlighted. Additionally, Coloplast expects mid- to long-term benefits from new catheter reimbursement coding in the United States.
Coloplast management is optimistic about year-over-year gross margin expansion in FY25, assuming constant currency conditions. This expansion is expected due to a reduction in cost of goods sold (COGS) inflation, although there may be some offsetting expenses related to ramping up operations at their new factory in Costa Rica. The company is also prepared for a final decision on the Local Coverage Determination (LCD) by year-end and is likely to include Kerecis in its FY25 guidance, even if the LCD is not finalized by the time of the FY results.
Citi's analysis indicates that Coloplast's current valuation is approximately 33 times the projected earnings for 2025, compared to the average of around 29 times from 2015 to 2019. With this valuation in mind, Citi sees limited potential for stock price increase, leading to their Neutral rating. The overall cautious outlook on the stock's future performance is based on the discussed factors and current market valuation.
In conclusion, investors should consider the cautious stance taken by Citi on Coloplast's stock due to its current valuation and projected earnings for 2025. It is important to keep an eye on the company's future growth prospects and financial performance to make informed investment decisions.