ConvaTec Group PLC (LON:CTEC) shares dipped on Monday following a downgrade to ‘underweight’ from 'neutral' by JPMorgan Cazenove to reflect risk in the FTSE 250-listed company’s turnaround.
The US bank's analysts also trimmed their price target for ConvaTec to 168p from 171p, a 20% discount to the sector due to lack of visibility on execution.
READ: ConvaTec stumbles on RBC downgrade as “bumpy ride” ahead
In a note to clients, they pointed out that the medical products firm is up against heightened competition, especially from Danish rival Coloplast, following a period of intense investment.
ConvaTec has embarked on a transformational strategy to drive greater innovation, customer focus and efficiency which has already yielded some improvements, although margins are expected to dip in 2020, they added.
But JPMorgan's analysts said the firm has not been investing enough in research & development, with the product pipeline sitting “at an all-time low”.
ConvaTec shares dropped 3% to 206.20p on Monday morning.