UBS starts Demant with 'buy', cuts Coloplast to 'sell'
28/08/2024 13:24
** UBS initiates coverage of medical devices maker Demant
DEMANT.CO with "buy" rating, and downgrades its Danish peer
Coloplast COLOb.CO to "sell" from "neutral"
** It sees Demant to deliver a 13% EPS compound annual
growth rate (CAGR) for 2024-2028, ahead of both Swiss rival
Sonova SOON.S and the broader sector
** According to the brokerage, the company's new 2024
guidance is conservative, and revenue growth should normalise in
2025 allowing for a 7.2% revenue CAGR for 2024-2028
** It expects Demant can generate enough operating leverage
to lift margins from 20.0% in 2024 to 21.1% by 2028, or in-line
with 20.9% in 2023
** UBS sees further downside risks for Coloplast, which are
neither taken into consideration in the consensus forecasts nor
in the share price
** The broker flags that Coloplast faces three potential
long-term challenges: risks from potential changes to wound
biologics reimbursement, changing treatment practices in
Urology, and improved competition in Ostomy
** UBS expects consensus forecasts to decrease 2-3% for 2025
in a base case scenario and potentially a further 4% if the
final wound reimbursement ruling does not go as expected
** It also sees Coloplast's 2025 guidance to disappoint on
margins
(Reporting by Marta Frąckowiak)
((marta.frackowiak@thomsonreuters.com))