UBS has quantified the volume of non-urgent elective surgery that was likely deferred across Australia during the peak of the pandemic-related restrictions.
Analysis indicates that to clear the backlog the company would need to run at 118% capacity utilisation until the end of 2020.
However, there are obvious limitations such as access to nurses, adequate PPE and future outbreaks of coronavirus.
UBS does not expect a utilisation rate above 100% of previous levels will be achieved in the first half of FY21.
Still, the outlook for private hospital operator volumes is favourable. Neutral rating retained. Target is $71.20.
Sector: Health Care Equipment & Services.
Target price is $71.20.Current Price is $65.66. Difference: $5.54 – (brackets indicate current price is over target). If RHC meets the UBS target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).
