Covalon Technologies is still a buy, this analyst says

On Oct. 21, Research Capital analyst Andre Uddin reaffirmed his “Buy” rating and C$3.75 target price on Covalon Technologies (Covalon Technologies Stock Quote, Chart, News, Analysts, Financials TSXV:COV) after the Mississauga-based medical device company announced a one-time cash dividend of C$0.15 per share, representing a 7.2% yield at its current price of C$2.08.

The dividend, totalling approximately C$4.1-million, will be paid Nov. 18, to shareholders of record as of Nov. 4, during Covalon’s fiscal first quarter of 2026. As of June 30, the company reported C$18.1-million in cash and no long-term debt, giving it what Uddin called a “pristine balance sheet.”

“Given the dividend will be paid in November, we do not expect any immediate impact on Covalon’s cash position and estimate the current balance at approximately C$16-million,” Uddin said. “This payment is a one-time special distribution and does not necessarily imply a recurring dividend policy moving forward.”

He said the decision likely signals a reduced likelihood of near-term acquisitions, though he continues to view Covalon as a GARP stock.

“We are maintaining our ‘Buy’ rating and maintaining our target price of C$3.75 based on the valuations of global wound care and advanced dressing companies,” he said.

Research Capital’s valuation is based on a blended EV/sales multiple of 2.4× applied to estimated 2025 sales of C$36-million, consistent with peer multiples of global wound-care and dressing firms such as Convatec, Organogenesis, Mimedx Group, and Integra LifeSciences.

The firm’s financial model projects Covalon’s EPS of C$0.06 for 2025, following C$0.11 in 2024, on revenue growing from C$31-million last year to C$36-million in 2025.

Uddin reiterated that Covalon “remains a well-positioned, underappreciated name in the advanced wound-care space,” benefiting from a solid cash position and the potential for longer-term multiple expansion as it grows its sales base.

Covalon designs and manufactures wound care, vascular access, and perioperative products, and markets its portfolio in the U.S., Canada, the Middle East, and Latin America.

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