On Friday, Citi maintained its Neutral rating on Coloplast (CSE:) A/S (COLOB:DC) (OTC: CLPBY), with a price target of DKK930.00. The stance comes after a discussion with Coloplast’s CFO, Anders Lonning-Skovgaard, during Citi’s 2024 healthcare bus trip. The conversation highlighted the successful uptake of Coloplast’s Luja male product and anticipated growth for the female version in the next 12 months. Additionally, the company foresees mid- to long-term benefits from new catheter reimbursement coding in the United States.
Coloplast management expects year-over-year gross margin expansion in FY25, assuming constant currency conditions. This is anticipated due to a reduction in cost of goods sold (COGS) inflation, although it may be partially offset by expenses associated with ramping up operations at their new factory in Costa Rica. The company is also awaiting a final decision on the Local Coverage Determination (LCD) by year-end and has indicated that its FY25 guidance will likely include Kerecis, even if the LCD is not finalized by the time of the FY results.
The financial firm pointed out that Coloplast’s current valuation is around 33 times the projected earnings for 2025, compared to the average of approximately 29 times from 2015 to 2019. Given this valuation, Citi sees limited potential for stock price increase, which underpins their Neutral rating. The analysis by Citi reflects a cautious outlook on the stock’s future performance based on the discussed factors and current market valuation.
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