Uncertainty is the word of the day when it comes to the near-term economic future. Sentiment will depend on the inflation figures expected next week. The March figure rose to 3.5% and the April employment figures showed a marked slowdown in the labor market; this combination has fueled fears of stagflation.
But first-quarter corporate profits beat expectations and the stock market improved with the S&P500 closing just below 5,200 yesterday. Economic strategists remain optimistic about the Federal Reserve’s decision to cut interest rates later this year.
So there are arguments to be made today for both the bears and the bulls, making the environment conducive to judicious stock selection.
With this in mind, Morgan Stanley analysts are taking a particular dig at two stocks, arguing that they are well-positioned to deliver strong returns over the coming year – in one case, as much as 110 %.
Using the TipRanks platform, we took a look at the big picture of these two picks and it appears the rest of the Street agrees with MS’s view – both are rated as Strong Buys by the analyst consensus . Here are the details, with comments from Morgan Stanley analysts.
Auna SA (MEASURE)
We will start with the healthcare sector, where Auna is one of the leading providers of healthcare services in many Spanish-speaking countries in Latin America. Auna’s presence is particularly strong in Mexico, Colombia and Peru, and the company has built one of the largest and most modern healthcare networks in Latin America.
In numbers, Auna is impressive. The company operates 31 healthcare facilities totaling 2,308 inpatient beds and employs approximately 14,900 people across its network. Auna boasts 1.3 million plan memberships, a strong customer base, and generating approximately $1 billion in annual revenue. The company uses a patient-centered model that encourages preventative care and focuses its resources on treating “high complexity diseases.”
That company went public on the New York Stock Exchange in March of this year, through an IPO that brought 30 million Class A shares to the market at $12 each. The offering brought in $360 million in gross proceeds. In financial disclosures related to the public offering, Auna reported that revenue for 2023 was US$1.05 billion, while adjusted EBITDA was US$223 million. These totals increased significantly year-over-year, by 58% and 90% respectively. Auna is the first Latin American healthcare provider to go public on Wall Street.
Covering this new public stock for Morgan Stanley, Mauricio Cepeda sees several paths to expansion. He writes about Auna: “We see Auna increasing its profits in 2024 on 3 main fronts: (i) increasing the occupancy rate of its hospitals in Monterrey, from 42% to 47%, thus increasing the Total company EBITDA of 11% (+PEN). 88mn) given the relevance of the Mexican operation; (ii) further maturation of the activity in Peru and…
