Jefferies International took the knife to its estimates and target price for NMC Health PLC (LON:NMC) on Tuesday, leading it to downgrade its rating for the stock to ’underperform’ from ‘hold’.
The US broker said it had lowered its earnings per share forecasts for the FTSE 100-listed hospitals operator by 11% and 12% respectively for in 2018 and 2019 as its analysts do not share the market optimism on Saudi Arabia and the economics to NMC.
READ: NMC Healthcare raises 2018 and 2019 guidance, sending shares up
This led Jefferies' analysts to cut their target price for NMC revise to 2,940p, down from 3,411p, with the shares currently trading at 3,446p each, off 4.3% on Monday’s close.
In a note to clients, they said: “With higher leverage, incentives now solely focused on EBITDA, and our view disclosure is more reliant on management, we believe the market is mispricing growth and increasing execution risks.”
The analysts added that after a deep-dive into NMC’s core business they believe the group’s underlying free cashflow conversion is only around 25%.