Mesoblast Limited

MSB Details
 
2017 Global Technology Leader in the Cell Therapy Industry:Mesoblast Limited’s (ASX: MSB) stock rose about 1.1% on December 08, 2017 as MSB is the first company named by Frost & Sullivan as the 2017 Global Technology Leader in the Cell Therapy Industry. As per Frost & Sullivan, MSB is an international industry leader due to its cutting edge mesenchymal lineage cell technology platform, deep intellectual property portfolio, late-phase clinical assets, and industrialized manufacturing capabilities. Moreover, the company has three cell therapy product candidates in Phase 3 clinical trials for acute Graft versus Host Disease, chronic heart failure, and chronic lower back pain caused by disc degeneration. MSB expects to report primary endpoint results from its Phase 3 trial in pediatric acute Graft compared to Host Disease in Q1 2018. On the other hand, MSB stock has fallen 11.33% in three months as on December 07, 2017 owing to volatile conditions. The recent title now instills more confidence on the stock, while we give a “Hold” recommendation at the current price of $1.345


MSB Daily Chart (Source: Thomson Reuters)
 

Japara Healthcare Limited

JHC Details
 
Delisted from S&P/ASX 200 Index:Japara Healthcare Limited’s (ASX: JHC) stock ended flat on December 08, 2017 post an initial slump, as the stock has been delisted from S&P/ASX 200 Index, effective December 18, 2017. JHC stock otherwise rose 29.20% in three months and is trading at a slightly high P/E. The Aged care business is the most heavily regulated business in Australia, where the Government controls bed licenses, facility accreditation, employee qualifications, daily care fees, clinical care funding and accommodation pricing. Further, in FY 18, the abnormal severity of the influenza outbreak across South Eastern Australia has affected JHC by reducing year to date occupancy by approximately 1.9% below the original projections. While there has been an improvement in occupancy, we are slightly bearish on the stock and give an “Expensive” recommendation at the current price of $2.19


JHC Daily Chart (Source: Thomson Reuters)
 

Ramsay Health Care Limited

 
RHC Details
 
Broadening business beyond hospitals:Ramsay Health Care Limited (ASX: RHC) has reaffirmed core EPS growth of between 8% and 10% for FY 18. Meanwhile, David Thodey AO has been said to joining the RHC Board as a non-executive director. On performance front, the strong growth in the Australian business is expected to continue while the company expects ongoing challenging environments in Europe to prevail in the near term. In addition, RHC is progressing well with integrated care opportunities, which will see the company broaden the business beyond hospitals. Meanwhile, RHC stock has risen 6.87% in three months as on December 07, 2017. Based on the untapped potential and ongoing performance, we give a “Buy” recommendation on the stock at the current price of $70.41


RHC Daily Chart (Source: Thomson Reuters)
 

Healthscope Limited

HSO Details
 
Established Four “Must Win” initiatives across the portfolio:Healthscope Limited (ASX: HSO), in the first half of FY18, expects the operating EBITDA to decline year on year for its Hospitals division. However, in the second half of FY18, the operating EBITDA is expected to deliver growth year on year, with that momentum to carry forward into FY19 and beyond. Overall, the FY18 operating EBITDA for the Hospitals division is expected to be broadly similar to FY17, subject to there being no material change in external market conditions and barring unforeseen circumstances.
 

Key FY18 Imperatives (Source: Company Reports)
 
Moreover, HSO has established four “Must Win” initiatives across the portfolio to drive FY18 performance for the development and improvement of the core business while delivering on the company’s expansion program. HSO is taking decisive actions to combat both the short-term challenges and to take advantage of strong underlying industry fundamentals in the long-term. Additionally, HSO’s operational cash flows were strong during FY17 with cash conversion of 101.6%. This will be used for funding the substantial part of the hospital expansion program. HSO stock has risen 24.69% in three months as on December 07, 2017. Foreseeing potential value from the initiatives, we give a “Buy” recommendation on the stock at the current price of $2.05


HSO Daily Chart (Source: Thomson Reuters)
 

Sonic Healthcare Limited

SHL Details
 
Interest expense to increase by 10-15% at constant currency in FY18: Sonic Healthcare Limited (ASX: SHL) for FY18, is expecting 6-8% growth of EBITDA on underlying FY17 EBITDA to A$889 million at constant currency FY17 FX rates. The company has projected this on assumption that there will be no regulatory changes, including the proposed US Medicare fees, which has potential FY18 impact of less than 1%. The projection also excludes future acquisitions.
 

FY17 Financial Performance (Source: Company Reports)
 
The interest expense is expected to increase by 10-15% at constant currency in FY18 and the tax rate is expected to be approximately 25%. However, in FY18, the capital expenditure is expected to be significantly lower after the completion of major infrastructure projects. Meanwhile, SHL stock has risen 6.07% in three months as on December 07, 2017 and is trading at a high level. We believe that the stock is still “Expensive” at the current price of $22.85


SHL Daily Chart (Source: Thomson Reuters)

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