The Royal Commission final report released last week left UBS surprised at the level of division between commissioners Pagone and Briggs.
In the broker’s view, while the report made 148 recommendations covering funding, quality and sustainability reforms, the end result is more room for the government to selectively adopt measures and delay the much needed regulatory clarity until the FY22 Budget.
In the short-term, UBS expects Japara Healthcare to benefit from the temporary funding in the second half and the increase in indexation in FY22 to 2-3%.
For the longer-term, Japara Healthcare’s investment case hinges on post-reform unit economics and the continuity of the refundable accommodation deposit (RAD) funding.
Neutral rating maintained with the target price rising to $0.75 from $0.50.
Sector: Health Care Equipment & Services.
Target price is $0.75.Current Price is $0.74. Difference: $0.01 – (brackets indicate current price is over target). If JHC meets the UBS target it will return approximately 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).
