HSBC upgrades Mediclinic to 'buy'
HSBC upgraded private hospital group Mediclinic to ‘buy’ from ‘hold’ on Thursday, hiking the price target to 340p from 280p.
The bank said Mediclinic’s South African operations were the least impacted during the first and second waves of Covid-19, which bodes well for the third wave.
"However, it’s the change in strategy that drives our upgrade," HSBC said. "We finally think the company has moved away from saturating the international markets it operates in with the same type of capacity."
It said Mediclinic treating the Swiss regulation-led moves to migrate procedures to outpatient to inpatient settings as an opportunity to realign resources and drive asset turnover is a positive outcome.
In addition, examining the use of remote monitoring to discharge patients early is an important step towards reducing the need to build out facilities at lower returns on investment.
HSBC noted that Mediclinic shares trade at one-year and two-year forward price-to-earnings discounts at 13.8x and 11.6x versus global peers at 22x and 18.2x, respectively.
At 1320 BST, the shares were up 2.7% at 306.20p.