Is Concepta PLC (AIM:CPT) On The Right Side Of Disruption?
Concepta PLC (AIM:CPT), a GBP£10.88M small-cap, is a healthcare company operating in an industry, which has experienced tailwinds from issues such as higher demand driven by an aging population and the increasing prevalence of diseases and comorbidities. Healthcare analysts are forecasting for the entire industry, a somewhat weaker growth of 9.00% in the upcoming year , and a strong near-term growth of 28.78% over the next couple of years. However, this rate came in below the growth rate of the UK stock market as a whole. Today, I’ll take you through the sector growth expectations, and also determine whether CPT is a laggard or leader relative to its healthcare sector peers. Check out our latest analysis for Concepta
What’s the catalyst for CPT’s sector growth?
Personalized and data-driven equipment underpins the future advancement and structural shift in the healthcare equipment industry. In the previous year, the industry saw growth in the forties, beating the UK market growth of 11.30%. CPT lags the pack with its lower growth rate of 23.84% over the past year, which indicates the company will be growing at a slower pace than its healthcare equipment peers. As the company trails the rest of the industry in terms of growth, CPT may also be a cheaper stock relative to its peers.
Is CPT and the sector relatively cheap?
Healthcare companies are typically trading at a PE of 31x, higher than the rest of the UK stock market PE of 19x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry returned a lower 10.73% compared to the market’s 12.78%, which may be indicative of past headwinds. Since CPT’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge CPT’s value is to assume the stock should be relatively in-line with its industry.
What this means for you:
Are you a shareholder? CPT has been a healthcare equipment industry laggard in the past year. If your initial investment thesis is around the growth prospects of CPT, there are other healthcare equipment companies that have delivered higher growth, and perhaps trading at a discount to the industry average. Consider how CPT fits into your wider portfolio and the opportunity cost of holding onto the stock.
Are you a potential investor? If CPT has been on your watchlist for a while, now may be a good time to dig deeper into the stock. Although its growth has delivered lower growth relative to its healthcare equipment peers in the near term, the market may be pessimistic on the stock, leading to a potential undervaluation. Before you make a decision on the stock, I suggest you look at CPT’s future cash flows in order to assess whether the stock is trading at a reasonable price.
For a deeper dive into Concepta’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other healthcare stocks instead? Use our free playform to see my list of over 1000 other healthcare companies trading on the market.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
