In a consolidating market, Credit Suisse foresees material upside in both a stand-alone and merger scenario for the company. The broker expects only modest improvement in growth in the second half relative to a weak first half but believes the issues are transient, such as bottlenecks in Victoria.
The broker reviews near-term estimates and forecasts FY20 operating earnings (EBITDA) of $29.7m. Credit Suisse believes Capitol Health can still generate a very healthy earnings growth profile in the outer years despite growing below industry trends of around 6%.
Credit Suisse maintains an Outperform rating and $0.28 target.
Sector: Health Care Equipment & Services.
Target price is $0.28.Current Price is $0.22. Difference: $0.06 – (brackets indicate current price is over target). If CAJ meets the Credit Suisse target it will return approximately 21% (excluding dividends, fees and charges – negative figures indicate an expected loss).
