On Thursday, JPMorgan (NYSE:JPM) upgraded PT Mitra Keluarga Karyasehat Tbk (MIKA:IJ) stock, a prominent Indonesian hospital chain, from Neutral to Overweight, maintaining a price target of IDR3,300.00. The firm cited the company as a significant long-term beneficiary of Indonesia's healthcare policy reforms.
PT Mitra Keluarga, which operates 30 hospitals and has a 35-year history, has experienced a stock underperformance of approximately 14% against the Jakarta Composite Index (JCI) over the past month. This decline followed the company's third-quarter earnings miss, attributed to weaker inpatient volumes due to insurance companies tightening budgets and increased pressure on hospitals.
The management of PT Mitra Keluarga also revised its top-line growth guidance for 2024, lowering expectations from 15-17% to 13-15%. Despite these challenges, JPMorgan views the current valuation of the company as attractive, trading at approximately 18 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), which is around 2.0 standard deviations below its three-year mean.
JPMorgan's unchanged price target of IDR3,300 is based on a 23 times multiple of the projected 2025 EV/EBITDA, which is 1.0 standard deviation above the three-year mean.
The firm anticipates that growth will re-accelerate in 2026, potentially leading to a re-rating of the stock. JPMorgan's analysis suggests that the market has already accounted for the negative impact of the soft third-quarter results in the current stock price.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.