ConvaTec Group PLC (LSE:CTEC) shares rose 3% to 265.2p after UBS downplayed concerns over proposed US Medicare changes affecting reimbursement for chronic care products.
The US Centers for Medicare and Medicaid Services (CMS) has proposed that ostomy and continence products could be included in a competitive bidding program.
This raised investor concerns about price pressure and margin compression at ConvaTec.
However, analysts at UBS and Stifel said the impact is likely to be limited.
Around 12% of ConvaTec’s group revenue is exposed to Medicare through ostomy and continence products, UBS noted, adding that the company’s Infusion Care segment is not affected.
UBS, which maintained a 'buy' rating on ConvaTec, said sweeping policy changes are unlikely and expects a relatively benign outcome. A 60-day consultation period is underway, with final decisions anticipated in late 2025.
The company's shares were top of the FTSE 100 risers as bargain hunters stepped in following a pullback in the past two days, which had wiped around 13% off the valuation of the stoma maker.
Analysts at Stifel also called the sell-off “overdone”, with the broker reiterating its 'buy' rating, saying the episode presents a buying opportunity despite the added uncertainty.
UBS also flagged Coloplast as having 6–8% of its revenue exposed to the proposed changes, and noted that other suppliers could be indirectly impacted through distributor-level pricing pressure.