UBS Upgrades Max Healthcare To 'Buy' Citing Efficient Execution, Profitable Acquisitions

Max Healthcare has received an upgrade from UBS owing to its efficient execution in bed additions and profitable acquisitions. The brokerage has resumed its coverage with a 'buy' rating, an upgrade from the earlier rating of 'neutral' and has raised the target price to Rs 1,200 from Rs 610.

UBS cited the company's strong visibility, efficient execution of bed additions and fast break-even of newer hospitals as key positives. The brokerage also expects the bed capacity to double in the next three years.

The brokerage highlights a remarkable track record on occupancy ramp-up. Further, it also notes that the company's asset-light model has been giving the company a lead and leverage against peers.

The stock is down 13% in the past two weeks despite delivering strong performance and according to the brokerage, this is an attractive entry point. It believes that the key debate on Max is its ability to deliver both operating profit growth along with large capacity additions.

There is also strong improvement in operating metrics and profitability of acquisitions. Additionally, the possibility of insurance companies' joint price negotiation will have low impact on big chains like Max Healthcare. This is due to their small revenue contribution, according to the brokerage.

Max Healthcare stock rose as much as 3.19% during the day to Rs 1,047 apiece on the NSE. It was trading 1.94% higher at Rs 1,026 apiece, compared to a 0.41% decline in the benchmark Nifty 50 as of 12:21 a.m.

It has risen 21.67% in the last 12 months. The relative strength index was at 42.67.

Fifteen out of the 23 analysts tracking the company have a 'buy' rating on the stock, four recommend a 'hold' and four suggest a 'sell', according to Bloomberg data. The 12-month analysts' consensus target price on the stock is Rs 1,158.4, implying an upside of 13.2%.