Shares in Convatec (CTEC) rallied 8% to 244.5p after the medical devices maker upgraded its medium-term organic growth target to a range of 6% to 8% from 2027.
This represented a healthy upgrade from previous guidance of 5% to 7%.
| Share price: 244.5p (+8%) | PE: 21.5x |
| Market cap: £6bn | Yield: 2.5% |
Convatec believes growth is ‘set to accelerate’, driven by the successful implementation of its strategy, recent product launches and a ‘rich product pipeline’.
Faster growth will also be supported by higher growth capital expenditure (capex) from the FTSE 100 firm.
In rude health
For the uninitiated, the company’s products and technologies help with the management of chronic conditions. London-headquartered Convatec is a market leader in advanced wound care, ostomy care, continence care and infusion care.
FY25 results revealed 6.4% organic growth during a year in which the group sold over 1 billion high-quality consumable products. Despite a headwind from tariffs, Convatec’s adjusted operating margin expanded by 110 basis points to 22.3%.
Reflecting confidence in its outlook and strategy, Convatec raised the FY25 dividend by 13% to 7.24 US cents.
During the year, the company also completed a $300 million share buyback and paid net earn-outs of $25 million related to historic acquisitions.
Compelling opportunities
‘Convatec performed strongly in 2025, demonstrating further resilient growth,’ said CEO Jonny Mason.
‘We delivered broad-based organic revenue growth across all categories, supported by new product launches, operating margin expansion, mid-teens growth in adjusted earnings per share and strong cash conversion.’
For 2026, Convatec reiterated guidance for double-digit adjusted earnings per share (EPS) growth and organic revenue growth of 5% to 7%. The company said it has identified further ‘compelling’ organic investment opportunities to accelerate growth.
Despite its FTSE 100 status, Convatec remains something of a hidden gem that merits wider recognition from investors.
The shares slumped late last year after Denmark’s Novo Holdings, which had been the largest shareholder, exited its position.
However, the disposal boosted liquidity in the stock. And the dip created a compelling entry point for new investors in a growth company seeing strong demand for its essential consumables.
FY25 was Convatec’s fifth year of broad-based organic revenue growth and its fourth year of adjusted operating margin progress.
Read the press release here: https://www.convatecgroup.com/investors/results-centre/
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