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Barclays upgrades ConvaTec and private hospital operators

Having spoken to ConvaTec's CEO and assessed the turnaround thus far, the analysts say they "believe now is the time to change our historically cautious view on the company" 

Mediclinic International Plc -

Barclays upgraded three healthcare companies as a gathering ‘new normal’ gives analysts reason to take a more constructive stance on the laggards within the sector.

A higher degree of earnings visibility is now apparent in a post COVID-19 world, the analysts said in a note to clients on Wednesday. 

“This is particularly the case at private hospital operators, in our view, where we expect a backlog of surgeries to support a recovery in elective procedures, structurally higher healthcare spend over the medium term and a likely more favourable regulatory backdrop going forward.” 

This led to an upgrade for Mediclinic International Plc (LON:MDC) to ‘overweight’ from ‘equal weight’ and for Spire Healthcare Group PLC (LON:SPI) to ‘equal weight' from ‘underweight’. 

Catheter and stoma specialist ConvaTec Group PLC (LON:CTEC) is now also seen to offer relative value, the analysts said. 

“Having spoken to the CEO and assessed the turnaround thus far, [we] believe now is the time to change our historically cautious view on the company.” 

Whilst ConvaTec's transformation is though likely to be a multi-year story, the Barclays team expect increased investment in the Coloplast stoma business to generate the same level of growth going forward.

The stock was upgraded to ‘overweight’ from ‘equal weight’ and its share price target was upped to 240p from 190p.

Mediclinic International target price was cut to 350p from 400p and Spire’s to 100p from 120p.

Quick facts: Mediclinic International Plc

Price: 284 GBX

LSE:MDC
Market: LSE
Market Cap: £2.09 billion
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