Medica Group PLC (LSE: MGP)

Medica Group PLC (LSE: MGP) is an FTSE All-Share index listed Health Care Equipment & Service company providing teleradiology services.

Investment Rationale – SELL at GBX 159.50

• Profit Booking: MGP’s stock price has comfortably crossed the R1 level suggested in the previous report published on 15 December 2022. Therefore, it is presenting a profit booking opportunity.
• Decline in Gross Margin: The Company’s gross margin has declined from 51.1% during H1 FY21 to 48.6% for H1 FY22.
• Technical Standpoint: The 14-days RSI of ~73.59 illustrates that the stock approaches an overbought territory. Thus, stock prices can face retracement in the short-term.
• Macroeconomic Uncertainties: The market sentiments can remain weak in the short-term due to resurgence in Covid-19 cases in China, 40-year high inflation, expected economic recession, subdued consumer disposable income, geopolitical tensions, and political risks.

Share Price Chart  

Valuation Methodology: Price/Earnings Approach (FY23E) (Illustrative)

Conclusion

Based on the notional gains, decline in gross margin during H1 FY22, coupled with the unfavorable valuation conducted above, a "SELL" recommendation on Medica Group PLC has been given at the closing market price of GBX 159.50 (as of 17 January 2023).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 17 January 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.

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