Tuesday, HSBC (LON:HSBA) initiated coverage on Auna SA (NYSE: AUNA) stock, a healthcare provider with operations across Latin America, assigning a Buy rating and setting a price target of $12.60. The financial institution's analysis points to significant growth opportunities that could drive the company's earnings in the near future.
Auna SA, recognized for its robust inorganic growth over the past fifteen years, has successfully expanded from its base in Peru into the Colombian and Mexican markets. This expansion reflects Auna's strong execution capabilities and strategic vision.
The company's recent acquisition of Dentegra in 2023 is poised to further enhance its growth trajectory. With the launch of new oncology healthcare insurance plans in Mexico, Auna is expected to see an uptick in its occupancy rates. This move is anticipated to complement the organic growth opportunities within its existing healthcare network in Peru.
HSBC's outlook for Auna is bolstered by the potential for a significant increase in the company's EBITDA margin. Over the next five years, Auna is projected to build on its already substantial EBITDA margin improvement, which saw a rise of approximately 630 basis points from 2018 to 2023, by an additional 300 basis points.
The analyst's commentary underscores the expectation of continued earnings momentum for Auna, driven by both the upcoming product rollout in Mexico and the company's ongoing efforts to expand and optimize its healthcare services across the regions it operates in.
InvestingPro Insights
As Auna SA navigates through its expansion and operational optimization, real-time data from InvestingPro provides a deeper insight into the company's financial health and market performance. With a current market capitalization of $465.68 million, Auna SA is trading near its 52-week low, reflecting the market sentiment captured by a recent price decline. Despite the challenges, the company's valuation implies a strong free cash flow yield, suggesting that its shares could be undervalued relative to the cash it's expected to generate.
InvestingPro data shows a significant revenue growth of 58.1% over the last twelve months as of Q4 2023, indicating the company's capacity to increase its sales figures substantially. Moreover, with an EBITDA growth of 109.66% in the same period, Auna has demonstrated an impressive ability to enhance its earnings before interest, taxes, depreciation, and amortization—a key indicator of financial performance.
InvestingPro Tips highlight that analysts do not anticipate Auna will be profitable this year, and the company has not been profitable over the last twelve months. This is an essential consideration for investors as it underscores the importance of monitoring Auna's path to profitability. Additionally, the company does not pay a dividend, which may be a factor for income-focused investors to consider. For those looking to explore further, there are additional InvestingPro Tips available on Auna SA, providing more detailed analysis and guidance. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and uncover the full range of insights that could help inform your investment decisions.
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