LONDON (ShareCast) - (Sharecast News) - Concerns about Mediclinic International's Swiss business have already been priced in, according to Investec, which has upped its recommendation on the FTSE 250 healthcare provider.
Investec also argued that Mediclinic could make another swoop for Spire Healthcare after it walked away from a potential £1.3bn bid last year.

Shares in South Africa-based Mediclinic, which is listed on London, have fallen sharply in recent weeks, from highs of around 700p. A first-half trading update is due on 17 October.

The City has been concerned about increased market pressures in Switzerland and a poor performance at Spire, which is 29% owned by Mediclinic. With Spire's net profit estimates cut for both this year and the next, Investec's analysts are now predicting a lower contribution from the business of between £5m and £7m.

But they added: "We believe consensus now reflects the risks in Switzerland and see opportunities for upgrades in the UAE recovery gathers momentum."

The analysts, who upgraded the shares to 'buy' from 'hold' though the price target was cut to 490p from 592p, held out some caution that seasonality in Switzerland and the UAE, combined with the recent opening of Parkview Hospital in Dubai, "will yield a stronger second half".

Investec also highlighted another potential tilt at Spire, which is battling ever-tightening NHS budgets. "With Spire now trading below its freehold property value, we view it increasingly likely that Mediclinic will make another attempt to acquire the company." Mediclinic walked away last year after the two sides failed to reach an agreement.

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