JHC – UBS rates the stock as Neutral

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UBS updates the main earnings drivers, including average occupancy in the second half, now estimated at 92.2% versus 93.6% in the first half. Second half government revenue per occupied bed is up 7% and second half staff costs per occupied bed are up 2%.

The broker has become more cautious about the operating outlook. Not only will the company need to navigate multiple headwinds in FY20, it is also scheduled to finish 424 new beds and receive the outcomes of the Royal Commission into the sector.

Neutral rating maintained. Target is reduced to $1.20 from $1.25.

Sector: Health Care Equipment & Services.

Target price is $1.20.Current Price is $1.12. Difference: $0.08 – (brackets indicate current price is over target). If JHC meets the UBS target it will return approximately 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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