Barclays ups NMC Health price target ahead of H1 results
By Michele Maatouk
Date: Friday 09 Aug 2019
(Sharecast News) - Barclays lifted its price target on shares of UAE-based healthcare operator NMC Health to 4,275p from 4,100p on Friday, saying first-half results later in the month should be a positive catalyst, particularly after recent share price weakness.
The bank said Thursday's company release should go some way to de-risking the numbers.
NMC put out a statement backing its full-year guidance as it sought to reassure investors following a slump in the share price earlier this week. It said that following a "good" performance in the first half of the year, the business remains in line with management expectations on all key metrics including revenue, EBITDA, net income, leverage, cash flow conversion and working capital.
As far as the upcoming results are concerned, Barclays said investors are likely to focus on the underlying performance of the business, execution against earnings guidance and free cash flow delivery.
"Seasonality in the business (Ramadan etc) does drive a H2 skew in both earnings and free cash. That said, we still expect a solid print with significant estimated free cash flow improvements in H1 19 relative to the prior year and forecast $56.8m (versus -$11m in H1 18)," it said.
"Following numerous investor discussions in recent weeks, we believe an in-line statement (both on earnings and FCF) would be sufficient to drive outperformance in the shares given the recent weak sentiment."
Barclays added that at current valuations, a deteriorating fundamental picture is priced in, while no credit is given for the Saudi opportunity.
"We continue to believe fundamentals are robust," said the bank, which rates NMC at 'overweight'.
At 1105 BST, the shares were down 1.7% at 2,059p.
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