Care building
National Medical Care Co.’s (Care) net profit of SAR 35.7 million in Q1 2021 came above AlJazira Capital’s estimate of SAR 25.1 million.
The brokerage said in an earnings report that better cost control and absorption of costs on higher margin cash and Ministry of Health segments aided gross profit margin expansion.
Care’s revenue growth is expected to moderate from current levels, while margins will likely remain relatively stable. In the medium term, improvement in margins through cost-control measures and revenue growth through capacity addition at Care National Hospital are likely drivers of the company’s growth.
Additionally, Aljazira Capital said that a high percentage of receivables from government and semi-government entities (79% in 2020) remains a major concern for Care, adding that it will revisit 2021 estimates, once the detailed financials are available.
The brokerage downgraded its recommendation to ‘Neutral’ on the stock due to limited upside from current levels, and maintained its target price (TP) at SAR 58.6 per share.
The rating implies that the stock is trading in the proximate range of its 12 months price target and that the stock is expected to move within +/- 10% range from the current price levels over next 12 months.
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