Medica PLC (LON:MGP) is on track to deliver the fastest growth in the healthcare services sector, according to Liberum.
Even after a good run for the shares since the start of year, Medica remains the house broker’s top pick in the sector with a 235p target price.
Liberum said the latest trading update underlined revenues have been strong year-to-date with elective activity already back to 75% of pre-COVID levels and posed to accelerate further during the summer months.
Elsewhere, the rest of the business is trading well while better cost control and business mix means gross margins are likely to be at least in-line with last year, which is well ahead of current consensus forecasts.
Gross margins are one area of concern for some added the broker, but rolling out its new platform and raising the acuity mix can keep them above consensus forecast, suggests the broker.
“Medica has re-rated by c.30% since the start of the year. However, it still trades at a 35% PE discount to its healthcare services peers.
“We think investors remain sceptical on the bounce-back for this year (where we are confident) and also underappreciate the uniqueness of longer-term revenue growth and earnings quality story “