Healthcare stocks have received quite some battering over the year as investors dump stocks in industries that have performed poorly overtime. One industry that has suffered the most is the healthcare industry having returned about -18% this year to date.

However, stocks in this industry experience a lot of volatility and if properly timed can portend some upside. Analysts at Meristem seem to think so and have recommended a buy for May & Baker one of the foremost stocks in the index at a target upside of 94%.

MAY & BAKER NIGERIA PLC (MAYBAKER)

  • The stock took a breather in the week, declining by 2.94% to NGN1.32 in the week,  hence pushing the YtD return to -16.46%.
  • The performance of the stock in previous week was largely anticipated following  weeks of gains. We expect bargain hunting on the stock this week, thus, increasing the share price.
  • Sustained double digit turnover growth 0f 10.67% in H1:2015 YoY driven by increased  production capacity and its diversified business model.
  • Cost of sales moderated to 63.53% (vs. 64.50% in HI:2015), just as OPEX ratio declined  to 26.29% compared to 28.93% in the previous year. However, Finance cost declined by 58.92% YoY as the company significantly pay down on its borrowings.
  • PAT in HI:2015 surged up 118.45% YoY, resulting in Net margin of 0.87% compared to prior year’s figure of -5.23%.
  • TP – N 2.57
  • Expected Return:   94.7%

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