FTSE 100 stock Convatec Group (LSE:CTEC) doesn’t sell the hottest or most glamorous products out there. It makes stoma bags and special wound dressings for people with chronic health conditions. But don’t be mistaken: this is a genuinely compelling growth story.
Convatec’s share price has exploded on Tuesday (24 February) after it released brilliant trading numbers for 2025. It reported strength across all parts of the business, and upgraded its medium-term sales guidance too. At 246p per share, it was last up 7% on the day.
So what’s been going on lately? And are Convatec shares a potential buy?
Impressive numbers
Adjusted revenues at the firm rose 5% to $2.4bn last year, at constant currencies. This was thanks to better-than-expected H2 sales, as Wound Care and Infusion Devices revenues both topped forecasts. Group sales were up 4.8% on an organic basis.
Adjusted operating margin also rose 110 basis points at stable exchange rates, to 22.3%. Improved pricing, widescale streamlining and revenue growth outstripping cost rises all contributed to the increase.
This all meant Convatec’s adjusted operating profit rose 10.2% at constant currencies, to $544m.
Chief executive Jonny Mason said the business enjoyed “broad-based organic revenue growth across all categories, supported by new product launches, operating margin expansion, mid-teens growth in adjusted earnings per share and strong cash conversion.“
Convatec hiked the full-year dividend 13%, to 7.244 cents per share, adding a further sweetener for investors.
Positive outlook
Convatec is confident it can keep its momentum going too. Alongside that bright update for 2025, the business hiked its medium-term organic revenue growth target to 6%-8%, with sales supported by new products hitting the market. It had previously tipped a range of 5%-7%.
The firm maintained its adjusted operating margin target of mid-20s percentages by this year or next. Adjusted earnings per share is also expected to rise by double-digit percentages in 2026, following on from last year’s 16% increase.
The thing is, has Convatec overstretched itself by raising its already-bullish forecasts?
The company operates in a highly competitive sector, and revenues are at risk if it loses or misses out on tenders to healthcare operators and other organisations. Its strong progress on margins could also come under pressure if it’s forced to slash prices to better compete, or if inflationary pressures return.
But on balance, I believe the outlook is extremely bright. Its pivot towards fast-growing product areas and high-margin technologies should supercharge sales and earnings, while its streamlining drive has more to deliver.
It can also strong structural support to continue, as an ageing global population supercharges product demand.
What next?
The question is, can Convatec’s share price continue soaring? City analysts think it can. Sixteen of them currently have ratings on the firm, providing a healthy range of opinions. Their average share price target is 316p per share, suggesting another 28% rise from today’s levels.
On balance, I think it’s a top share to consider today. But it’s not the only FTSE 100 momentum stock that’s caught my attention.
