Shares in wound care specialist Convatec (CTEC) climbed 4.4% to 193p on Wednesday despite the broader UK market falling 2.5% after the company upped expectations for full-year revenues and profits ended 31 December 2020.
Today’s announcement was unscheduled and reflected a stronger than expected trading performance in the third-quarter with constant currency revenue growth of 5.6% to $493 million.
The key drivers were ‘significant growth’ of 27% in Infusion Care and continued strong growth in Continence & Critical Care, up 7.2%. Revenues at the nine-month stage to 30 September were 4.8% higher in constant currencies.
The company is now guiding for full-year revenue growth to be at the top end of its 2%-to-3.5% range, highlighting that it doesn’t expect growth in fourth-quarter revenues due to rising Covid-19 infections rates and the impact from the disposal of the skincare business at the end of the quarter.
Operating margins are expected to be between 18.5% and 19% as the company benefits from proactively delaying some 'transformation' investments due to Covid-19 and bearing down on operating expenses. Some $10 million of transformation investments will be now happen in 2021, lowering the investment this year to between $40 million-to-$45 million.
On the back of today’s news, analysts at Numis raised their full-year earnings per share (EPS) forecast by 11% from 10.9 cents to 12.1 cents, while they expect ‘growth rates to continue to improve in the 2021 financial year, but for adjusted operating profit, and EPS to be flat assuming deferred transformation investment is made in 2021.’
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