Aljazira Capital maintains “Neutral” recommendation for Saudi German Hospital

Aljazira Capital maintained its “Neutral” recommendation towards Middle East Healthcare Co. (Saudi German Hospital) and reduced the target price from SAR 29.63 to SAR 23.2.

The brokerage firm said in a note that higher operating costs would significantly impact the company’s earnings in fiscal year (FY) 2019.

“Opening of a new hospital in Dammam and, hiring of management professionals and caregivers are expected to elevate costs over the next few quarters,” Aljazira Capital said.

“We expect these operating costs to remain high until operations stabilizes, which would generally take six to seven quarters. We will review our estimates once an official commencement date for Dammam hospital is provided,” the firm further added.