On Monday (NASDAQ:MNDY), BofA Securities updated their outlook on Fortis (NYSE:FTS) Healthcare Ltd (FORH:IN) shares, increasing the price target to INR715 from the previous INR680. The firm has maintained a Buy rating on the healthcare provider's stock.
The adjustment follows Fortis Healthcare's recent financial performance, which aligned with BofA Securities' expectations in terms of revenue and exceeded estimates on EBITDA by 10%, as reported by the market.
The improved financial metrics were attributed to the performance of both the hospital and diagnostic segments. Fortis Healthcare saw an increase in occupancies to 72% compared to 69% in the last year's corresponding quarter, which contributed to a 14% growth in hospital revenue.
Moreover, EBITDA margins reached 21.5%. The analyst noted that Agilus, the company's technology platform, is showing gradual revenue growth, and the quarter-over-quarter margin expansion of 540 basis points was unexpectedly high.
BofA Securities believes that Fortis Healthcare's ongoing efforts to close the margin gap with its peers, in both hospital and diagnostics divisions, will continue to drive a positive re-rating of the stock. The resolution of outstanding litigation, with hearings expected to conclude within the month and outcomes likely a few months later, is also anticipated to contribute to the company's valuation.
The analyst reiterated a Buy rating for Fortis Healthcare, expressing confidence in the company's growth trajectory and operational improvements. The updated sum-of-the-parts (SoTP)-based price objective reflects the analyst's assessment of the company's individual business segments and their collective value to the firm's overall market valuation.
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