On Wednesday, Deutsche Bank (ETR:DBKGn) reiterated its Buy rating on ConvaTec Group Plc (CTEC:LN) (OTC: CNVVY) with a price target of GBP3.15. The firm highlighted ConvaTec's expansion in its Infusion Care division, which has recently moved beyond diabetes care to include new therapies such as Parkinson's disease treatment. ConvaTec introduced the NeriaTM guard infusion set, designed for AbbVie (NYSE:ABBV)'s therapy for Parkinson's disease, which has received approval in Japan and Europe.
The analyst noted that ConvaTec is gearing up for a launch in the United States in 2024, following the lead of AbbVie. However, the latest developments indicate a setback for AbbVie, which has not secured approval for its new Parkinson's disease drug in the US. The Food and Drug Administration (FDA) identified issues at a third-party manufacturing site, leading to the issuance of a complete response letter for ABBV-951, a combination of a device and two drugs aimed at managing Parkinson's symptoms.
The situation with AbbVie could affect ConvaTec's plans, as the company was preparing to introduce its infusion set in the US market in conjunction with AbbVie's therapy. The NeriaTM guard infusion set is part of ConvaTec's strategy to diversify its product offerings and address a broader range of medical conditions.
ConvaTec's Infusion Care division has been a focus of growth for the company, with the expansion into treatments for Parkinson's disease representing a significant step. The division's products are critical in the administration of complex therapies that require precise delivery of medication.
The implications of the FDA's decision on AbbVie's drug approval process are yet to be fully understood. ConvaTec's collaboration with AbbVie for the US launch of its product was contingent on the approval of ABBV-951. The company has not yet commented on the FDA's recent complete response letter or its potential impact on the planned launch of the NeriaTM guard infusion set in the United States.
In other recent news, ConvaTec Group Plc has been the focus of two significant analyst actions. Berenberg reiterated a Buy rating on the company, maintaining a price target of £3.10, despite a recent drop in share price following draft local coverage determinations in wound care. Berenberg's analysis suggests the market reaction may be overstated and the current valuation could present an opportunity for upside.
In parallel, HSBC has upgraded its rating for ConvaTec from Hold to Buy, and increased the stock target to GBP3.50, up from GBP2.20. The firm cites strong growth momentum, reduced cost inflation, and potential for better execution and mergers and acquisitions as factors contributing to this improved outlook. HSBC's new price target, based on an adjusted present value methodology, suggests a 21% increase over ConvaTec's current share price.
Both analyst firms highlight ConvaTec's market position and future performance despite short-term challenges. They also identify potential catalysts and risks for ConvaTec in the near future, including the potential for an increase in 2024 guidance during the first half-year results in August and the risk of losing market share.
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