NMC Health surges on JPMorgan upgrade
UAE healthcare provider NMC Health surged on Wednesday as JPMorgan Cazenove said it continues to be a strong growth story thanks to a mix of organic initiatives and aggressive M&A activity and bumped the stock up to 'overweight' from 'neutral', hiking the price target to 4,265p from 3,450p
FTSE 100
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16:34 24/04/24
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FTSE All-Share
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NMC Health
938.40p
16:44 27/04/20
The bank noted that NMC has deployed $472m on 14 transactions since the beginning of the year and spent a total of about $2bn on acquisitions over the last three years.
"Without factoring in any new M&A activity, its medium-term outlook looks impressive with net earnings growing at a three-year compound annual growth rate of 36% between 2017 and 2020 on our numbers," it said.
JPM attributed the price target increase to upgraded forecasts and a change to the relative valuation method, as it ow values the healthcare and distribution business separately.
It estimated that between its cash balance as of H1 2018, free cash flow generation and additional debt, NMC could deploy another $1bn on M&A activity over the next 18 months.
"We expect M&A activity to target general healthcare facilities when attractive propositions arise, but also underserved services such as IVF, LT Care, Cosmetic, Paediatric, Oncology, Mental Health, and Rehabilitation."
At 1050 GMT, the shares were up 8.1% to 3,684p.