taken over by private equity.
now relisted, with private equity still owning a fair chunk.
relisting benefits hso with better balance sheet, and support of capital markets to expand their hospitals domestic and overseas. same story as RHC, just a little earlier.
broker reports information:
Street Talk Analysts initiate Healthscope with over $2.40 targets
Initiation reports from Healthscope’s six-strong joint lead manager line-up are flooding into the market, with universal backing of the stock and price targets above $2.40 a share.
Credit Suisse, Goldman Sachs and UBS analysts initiated coverage on Thursday morning, while reports from fellow lead managers Macquarie, CIMB and Bank of America Merrill Lynch were also expected in fund managers’ inboxes.
UBS’s health care team, led by Andrew Goodsall, started with a $2.70-a-share price target and “buy” rating. Healthscope listed at $2.10 a share on July 28 and was trading at $2.33 on Thursday morning.
The analysts pointed to Healthscope’s three-pronged growth plan, based around brownfield opportunities, margin gains and revenue growth, and said the hospital operator had the management team to carry it out.
“HSO is led by a well-credentialled health/hospital industry management team, who delivered three-year trailing revenue CAGR of 5 per cent and NPAT equal to about 11.4 per cent, during a restructure period,” the analysts told clients.
“The three-year opportunity is 200bps margin upside to match peer metrics, along with brownfield growth.”
UBS expects Healthscope to grow earnings before interest and tax by more than 11 per cent each year for the next three years.
Credit Suisse’s team, led by Saul Hadassin, initiated with a “neutral” rating and $2.50 a share price target. The analysts said Healthscope was fairly valued at a 10 per cent discount to its closest peer, Ramsay Health Care.
Credit Suisse reckons brownfield hospital developments are the key to Healthscope’s growth.
“Early signs are positive, with several projects recently completed and a number remaining on track to finish over the next 12-24 months,” the analysts told clients.
“When factoring in the proposed project pipeline, we estimate an increase in HSO’s total operating theatre (OT) base of about 2 per cent to 4 per cent per annum, between FY15 and FY17.”
Goldman Sachs initiated with a “buy” rating and $2.40 a share valuation.
PUBLISHED: 3 hours 26 MINUTES AGO | UPDATE: 0 hour 0 MINUTES AGO
Edited by Sarah Thompson, Anthony Macdonald and Jake Mitchell
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Analysts at CIMB and CBA have issued bullish recommendations on Healthscope which listed in July at $3.6 billion – the largest private equity-backed IPO in four years.
CIMB’s Derek Jellinek estimates Healthscope can deliver earnings before interest, tax, depreciation and amortisation of 11.3 per cent per annum and margin expansion of 160 basis points to 16.9 per cent through 2017 financial year.
He cites solid organic growth, infrastructure expansion and ongoing efficiency improvements, “with strong cash generation supporting a 70 per cent payout ratio.” Jellinek has started coverage with an “add” recommendation and $2.75 price target.
CBA analyst Bruce Du, meantime, has initiated Healthscope at “overweight” alongside a $2.55 price target. ”This implies an 2016 financial year price to earnings ratio of 24.3 times, with a forecast 11.5 per cent three-year EPS compound annual growth rate,” he writes in a research note to clients on Thursday
While capital expenditure is expected to climb to about $1.04 billion from 2015-2019 financial years, “so are the returns,” Du adds.
HSO Price at posting:
$2.38 Sentiment: Hold Disclosure: Held
