Coloplast (CSE:COLOB) A/S (OTC: CLPBY) received a Neutral rating from Citi with a price target of DKK930.00. The decision follows a discussion with Coloplast's CFO, Anders Lonning-Skovgaard, during Citi's 2024 healthcare bus trip. The conversation highlighted the success of Coloplast's Luja male product and expected growth for the female version in the next 12 months. Additionally, the company anticipates mid- to long-term benefits from new catheter reimbursement coding in the United States.
Coloplast management predicts a year-over-year gross margin expansion in FY25, assuming constant currency conditions. This expansion is expected due to a decrease in cost of goods sold (COGS) inflation, although it may be partially offset by expenses related to the new factory in Costa Rica. The company is also waiting for 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.
Citi noted that Coloplast's current valuation is approximately 33 times the projected earnings for 2025, compared to an average of around 29 times from 2015 to 2019. With this valuation, Citi sees limited potential for stock price increase, supporting 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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**Analysis:**
Coloplast (CSE:COLOB) A/S (OTC: CLPBY) received a Neutral rating from Citi with a price target of DKK930.00. The company's successful uptake of its Luja male product and anticipated growth for the female version are positive indicators for potential future performance. Coloplast management expects a gross margin expansion in FY25, driven by cost-saving measures and new product introductions. However, Citi's cautious outlook on the stock's valuation suggests limited potential for significant stock price growth in the near term. Investors should consider these factors when evaluating their investment decisions in Coloplast.
