Shares in medical company ConvaTec fell 20% after it lowered its profit guidance this morning.
This morning’s results: Supply chain issues scupper ConvaTec’s Q3 results
The Share Centre has said it expects shares likely to fall back to start of year levels as a result of today’s news and has put its current ‘buy’ recommendation under review.
Lower revenue guidance
Graham Spooner, investment research analyst at The Share Centre, said: “Shares in international medical products and technologies company Convatec were down 14% in early morning trading today following news that the group was lowering its revenue guidance for the year.
“The group, which is a fairly recent entrant to the FTSE 100, blamed poor sales of new products in the latest quarter as well as problems with supply related to Advanced Wound Care manufacturing lines from the US to the Dominican Republic. Full year organic revenue growth is now forecast to be 1% to 2% down from an expected 4%+.
“Commenting on the update, Convatec’s CEO Paul Moraviec conveyed his disappointment at how the overall group performance in Q3 was ‘severely affected’ by these issues. Moraviec tried to reassure investors by highlighting that despite these issues, the company had ‘delivered an acceleration in organic revenue growth and continued to expand its product portfolio’.
“The shares which hit a high of around 344 pence in June fell back over the late summer period on the back of disappointing results and have now given up all of its gains since the beginning of the year.
“Combine this with the fact that the group will now be forced to concentrate on resolving the supply issues in order to deliver on back orders, we have decided to place our current ‘buy’ recommendation under review.”