NMC posts a healthy trading update as it raises guidance for 2018

Company remains on track to hit profit margin goals.

Article updated: 22 October 2018 10:00am Author: Ian Forrest

  • United Arab Emirates-based healthcare provider NMC Health raised its full-year core earnings and revenue forecasts
  • The company cited strong organic growth but states that profit growth in 2019 is likely to be lower due to expansion costs
  • The Share Centre continues to recommend the shares as a ‘hold’ for investors seeking growth and willing to accept a higher level of risk.

Healthcare group NMC provided a positive trading update for the market this morning and raised its full-year revenue and profit guidance. It now expects full-year revenue to grow by 24%, up 2% on its previous estimate, and earnings are forecast to be $480m rather than $465m. The company expects the good growth to continue into next year thanks to a combination of a ramp-up at its key medical facilities and the integration and expansion of recently-acquired companies. However, profit growth in 2019 will likely be lower than this year due to the costs of opening new facilities and integrating a large private medical group in the UK.

Overall this represents good news for investors and the market responded positively with a 3% increase in the shares in early trading. The confirmation that the company remains on track to achieve a 25% profit margin by 2021, and still has the benefit of a large joint healthcare venture with the Saudi government to come, is also very positive for investors. Despite a pullback in the shares in recent months the company has still comfortably outperformed the market over the past two years. It trades on a relatively high valuation so we continue to see the shares as no better than a ‘hold’.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Ian Forrest portrait photo
Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.