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(Sharecast News) - Analysts at RBC Capital Markets upgraded medical products and technologies company Convatec from 'underperform' to 'sector perform' on Wednesday, stating further earnings downgrades appeared to be already priced in.
RBC Capital said Convatec's technology and innovation event on Tuesday was "reassuring, rather than revolutionary", but noted that the product launch cadence previously highlighted by the firm seemed to be "on track".
The Canadian bank, which upped its price target on the stock from 195.0p to 210.0p, highlighted that since Convatec's full-year results, shares had recovered "almost all" of their prior 6.0m underperformance, despite the "continuous trickle of consensus earnings downgrades" over the past twelve months.
"We believe that the initial underperformance was driven by the consensus earnings downgrades that came through as we had anticipated, together with general market weakness, and subsequent outperformance was driven by the good organic growth and a reset of expectations," said the analysts.
While RBC acknowledged that further earnings downside was likely for 2023 as it pointed to a 5-6% mechanical downside, with the shares now close to its new 210.0p price target, the bank opted to raise its rating on the stock.
Reporting by Iain Gilbert at Sharecast.com
