Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Tuesday, JPMorgan analysts adjusted their outlook on Rainbow Children’s Hospitals (RAINBOW:IN) by lowering the price target to INR 1,700 from the previous INR 1,770. Despite this reduction, the firm continues to recommend an Overweight rating on the stock.
The revision reflects a tempered expectation for margins, leading to a slight decrease in the forecast for the company’s EBITDA. JPMorgan’s analysts have reduced their EBITDA estimates for fiscal years 2026 and 2027 by 2% and 4%, respectively. This change in the price target and estimates comes after Rainbow Children’s Hospitals experienced a year of robust revenue and EBITDA growth, reporting increases of 17% and 16% year-over-year in FY25.
Rainbow Children’s Hospitals’ performance has been notable, especially considering the challenges faced, such as a 3% year-over-year decrease in Average Revenue Per Occupied Bed (ARPOB) and initial losses from the addition of 280 new beds, which expanded the existing capacity by approximately 15%. Despite these obstacles, the company’s in vitro fertilization (IVF) segment saw a remarkable 70% growth year-over-year, contributing 2.6% to the top line.
Looking forward, JPMorgan anticipates strong EBITDA growth for Rainbow Children’s Hospitals. This optimism is based on the expectation that the newly added capacity will reach break-even, coupled with a predicted mid-single-digit growth in ARPOB and gains from operating leverage. Additionally, the potential for inorganic growth opportunities could further enhance the company’s financial outlook, with a forecasted 16%/17% compound annual growth rate (CAGR) in revenue/EBITDA over FY25-27E.
In comparison to its peers, Rainbow Children’s Hospitals’ stock has not performed as well, trailing the BSE Healthcare Index by 11% over the past year. However, JPMorgan highlights that the stock is now trading at attractive valuations on a pre-INDAS basis, at approximately 26x/22x EV/EBITDA for FY26E/27E. This represents a roughly 20% discount when compared to covered peers, suggesting a potential value proposition for investors.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.