Stockchase Opinions

David Driscoll Coloplast A/S CLPBY-OTC BUY Mar 25, 2025

Free cash flow is still rising, and revenue growth remains 6-8% which allows acquisitions and in turn lifts earnings. Debt payments reduce debt, good. They grow 2-3x faster than GDP. Colostomy bags and bandages will remain in demand. Shares will rebound. He's owned this a long time and will keep buying.

$10.480

Stock price when the opinion was issued

Healthcare
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Makes catheters and colostomy bags. Elective surgeries are coming back. During pandemic, these were paused and medical device companies suffered. Their balance sheet is pristine. Number one in their business. Generate ROC close to 38%. Cost of capital is 6%. Room for R&D to move forward.
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It is a Danish company which is a global leader in ostomy care and continence care, and third largest in wound care. It has done two big acquisitions. It has had some weakness in 2023 but should grow through good M&A and good R&D. It has had an 11% dividend growth rate per year and 12% share growth rate per year.       Buy 9  Hold 15  Sell 3

(Analysts’ price target is $841.23)
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Price target: 870.17 Danish krowns

Prices fell hard in 2022, but has partially come back as underlying growth has been robust at 8-9% organic growth in revenue per year. It pays a 2.3% dividend and offers high growth. Are the leaders in their space.

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Everyone is on the AI-hype train. But you still have the long-term demographic of aging populations. Likes the ROIC at 14% compared to WACC at 7%. Has cashflow to make tuck-in acquisitions. You get organic revenue growth plus revenue growth from the acquisitions, and this will grow the business over time and compound. The 8th wonder of the world is time plus compounding.

Medical device industry has been slow since Covid, as everything shut down and surgeries cancelled. With rising rates, customers de-stocked inventory rather than buying more. Demand starting to pick up, so they can raise prices. Exceptionally cheap for a company that can grow 15% a year.

PAST TOP PICK
(A Top Pick Feb 12/24, Down 4%)

A challenging year, partly due to slowdown in China. Many products are used after elective surgeries; overhang from Covid has slowed those surgeries. Long-term, the demand is there. Past 10 years, dividend's grown ~11% a year and shares have risen by ~12% a year. 

Healthcare will see a big turnaround over the next 1-3 years. He's buying now for clients.