Morgan Stanley upgrades Convatec to 'overweight'

MS upgraded Convatec to ‘overweight’ from ‘equalweight’ and upped the price target to 250p from 235p.

"We take a fresh look at the Medtech risk reward profile, post first-quarter results," the bank said.

"Chronic Care remains a preferred end market exposure for us, and risk reward skew now supports switching preference from Coloplast to Convatec after: (i) Coloplast's circa 20% year-to-date price outperformance and (ii) relative valuation."

Denmark’s Coloplast was downgraded to ‘equalweight’ from ‘overweight’ and the price target cut to DKR 950 from DKR 970.

"We note (i) Convatec is approaching the bottom of its historical range, (ii) Coloplast is approaching the top of the range, (iii) the Convatec versus Coloplast valuation spread is also near the bottom of the range," MS said.

"From a valuation perspective we now see a better setup for Convatec."