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Barclays has little confidence in the Mediclinic recovery story

“We were disappointed by Mediclinic's first-half trading statement yesterday, which left us less confident in the recovery story”
Mediclinic shares dropped 16% yesterday, and they’re down another 5% today

Mediclinic International Plc (LON:MDC) shares were under pressure again on Thursday as Barclays downgraded the stock on the back of Wednesday’s disappointing interim trading update.

Shares in the private hospital operator nosedived yesterday after it reported a 10% fall in half-year underlying earnings (EBITDA) to £210mln (H1 17: £230mln).

The drop-off was primarily down to its Swiss subsidiary, Hirslanden, which was hit by “weaker than expected growth” in admissions and a higher proportion of insured patients.

READ: Mediclinic in red after write-downs at Spire and in Switzerland

Analysts at Barclays said the gloomy update left them “with less confidence in the recovery story” and they cut their rating to ‘equal weight’ (from ‘overweight’) as a result.

“We see downside to the updated full-year guidance and believe that sentiment will remain subdued until we see clear execution and improvement in the businesses,” read a note to clients.

The number crunchers added that Mediclinic will be “hard-pressed” to achieve a full-year margin of 16% in its Swiss business having only achieved 14.3% in the first half.

Over in the UAE, the company said on Wednesday that 2018/19 underlying earnings are “on-track”, but Barclays pointed out that first-half sales missed expectations while they “question the assumed recovery” in the second half.

The stock, which dropped 16.5% yesterday, was down another 4.5% to 376.5p in mid-morning on Thursday.

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Mediclinic International Plc Timeline

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