Jefferies downgrades Spire Healthcare after re-rating

Jefferies downgraded its stance on shares of private healthcare provider Spire Healthcare to ‘underperform’ on Tuesday, as it said the rally since 3 October, when it upgraded to ‘hold’, gives an "unfavourable risk/reward" to the stock.

The bank, which lifted its price on the shares to 113p from 106p, said Spire has lagged its peers hence has traded historically at a sector discount.

It noted that Spire has recently been investing in quality to improve the patient experience and the ratings of its hospitals. Potential benefits from a cost savings initiative and targeted higher admissions, especially from self-pay could help improve return on invested capital, said Jefferies.

However, it expects the near-term political uncertainty in the UK to weigh on the stock and a result, for the shares to be driven by short-term dynamics.

It also pointed to the company’s stretched balance sheet and the lack of presence in Central London.

At 1320 GMT, the shares were down 3.1% at 134.70p.