COLO B: Executive Team Changes And Chronic Care Strategy Will Drive Outperformance

Key Takeaways

• Strategic restructuring, targeted innovation, and successful acquisitions are strengthening growth, operational efficiency, and diversification across premium and chronic care segments.
  
• Expanding emerging market presence and user-focused product launches are driving recurring revenues, reducing regional dependence, and positioning Coloplast for sustained long-term momentum.
  
• Intensifying pricing, regulatory, and currency pressures threaten Coloplast's revenue growth, margins, and brand reputation, amid operational risks and dependence on successful product innovation.

Catalysts

Engages in the development and sale of intimate healthcare products and services in Denmark, the United States, the United Kingdom, France, and internationally.

• The ongoing reorganization into distinct Chronic Care and Acute Care units, with a dedicated R&D function for Chronic Care, is designed to accelerate innovation cycles and improve time-to-market for new products. This is expected to drive higher revenue and operating margins by leveraging user-focused innovation and maximizing manufacturing efficiency.
  
• Robust growth in Chronic Care segments-especially Ostomy and Continence Care-continues to be supported by increasing global incidence of chronic conditions and a growing elderly population, expanding the addressable market and providing a stable foundation for predictable, long-term revenue and earnings growth.
  
• Successful integration and scaling of recent acquisitions like Kerecis, along with the merger of Advanced Wound Dressings and biologics, is expected to enhance Coloplast's competitive positioning in premium wound care markets, supporting margin expansion and revenue diversification as healthcare spending and quality-of-life-focused solutions see secular increases.
  
• Proactive commercial investments in high-growth emerging markets, especially tender-based business in Asia, Eastern Europe, and Latin America, position Coloplast to capture above-market growth, further diversifying revenue streams and reducing over-reliance on mature European regions-likely leading to sustained multi-year revenue and earnings momentum.
  
• The company's user-centric innovation, ongoing product launches (e.g., Luja, SenSura Mio, Provox Life), and pipeline progress (e.g., INTIBIA) are poised to benefit from the accelerating trend toward home-based healthcare and patient-managed solutions, supporting not only top-line growth but also higher recurring revenues and improved net margins over time.

Coloplast Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Coloplast's revenue will grow by 7.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 14.6% today to 21.2% in 3 years time.
• Analysts expect earnings to reach DKK 7.3 billion (and earnings per share of DKK 32.89) by about September 2028, up from DKK 4.1 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as DKK6.1 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 26.2x on those 2028 earnings, down from 34.3x today. This future PE is lower than the current PE for the GB Medical Equipment industry at 31.8x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.89%, as per the Simply Wall St company report.

Coloplast Future Earnings Per Share Growth

Risks

• The implementation of competitive bidding by CMS in the U.S. Chronic Care business could introduce significant pricing pressure starting as early as 2027, affecting approximately 6% of total group sales (50% of the 12% U.S. Chronic Care segment), with the potential for price reductions up to 30%, which would directly threaten revenue and compress net margins.
  
• Regulatory complications and technical requirements unique to certain regions, such as China's strict local standards for wound dressings, have already triggered costly product returns (DKK 80 million impact in 2024-25 and ongoing headwinds into 2025-26), exposing Coloplast to recurring risks of sales interruptions and further negative impacts on revenue and earnings.
  
• Ongoing and recurring product recalls, execution issues, and increasing regulatory scrutiny (both in Europe and China), pose risks to operational efficiency, brand reputation, and long-term profitability due to potential loss of market share to competitors and increased compliance costs.
  
• Fluctuations in foreign exchange rates, particularly the depreciation of the U.S. dollar and emerging market currencies against the Danish krone, have negatively impacted reported revenues, and persistent currency volatility could continue to restrain revenue growth and earnings in future years.
  
• The Acute Care segment is described as more volatile and dependent on innovation compared to the stable but slower-growing Chronic Care segment, implying that failure to deliver successful new launches or manage heightened R&D expenses could result in margin pressure, unpredictable earnings, and overall revenue volatility for the group.

Valuation

• The analysts have a consensus price target of DKK716.111 for Coloplast based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of DKK962.0, and the most bearish reporting a price target of just DKK585.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be DKK34.4 billion, earnings will come to DKK7.3 billion, and it would be trading on a PE ratio of 26.2x, assuming you use a discount rate of 5.9%.
• Given the current share price of DKK620.0, the analyst price target of DKK716.11 is 13.4% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.