The health sector was in focus in the early part of this week with Macquarie noting the continued dominance of the supermarkets in the pharmaceutical space and downgrading Australia Pharmaceutical and Sigma. Ramsay was luckier with BA-Merrill Lynch upgrading after a review of its recent French acquisition.
In the good books
Macquarie upgraded fund manager Henderson Group (HGG) to Outperform from Neutral. The broker notes 80% of Henderson's funds are outperforming over one and three years but this is not reflected in the current share price, given concerns around European political risk. The broker believes performance and inflows offset macro and regulatory risks.
BA-Merrill Lynch upgraded Ramsay Health Care (RHC) to Buy from Neutral after reviewing the acquisition of Generale de Sante. A more positive view of the value of the French business is based on the procurement savings in the next three years and greater margin leverage from volume growth. Merrills thinks Ramsay can leverage a comparable lower cost now that it has purchasing power in France and drive up to $100 million in savings in Ramsay Australia over the next two to three years.