Daily ShareChat: Wakefield Health

Wakefield Health's profit downgrade has let ABN Amro Craigs analyst Michelle Perkins to slash her 2010 and 2011 net profit forecasts by more than 20%.

The private hospital operator said its first-half net profit could be down between 30% and 40% on last year's first half.

"The extent of the downgrade is surprising given Wakefield's recent investor presentation (on July 20) made no mention of a negative outlook, other than to reiterate cautious comments made in conjunction with the full-year result (announced on May 19)," Perkins says.

A recent uptick in the volume of elective surgeries through the Capital & Coast District Health Board in April, May and June, the months Wakefield noted as being negatively affected, may partly reflect the ramp-up of the new Wellington Hospital "but this trend has obviously not been relicated at Wakefield."

The downgrade is a clear indication Wakefield's operating theatres are not running at or close to full capacity and highlights its high fixed-cost structure, Perkins says.

She has cut her 2010 net profit forecast from $10.7 million to $8.1 million compared with the $10.1 million result reported for the year ended March and cut her valuation of the stock from $9.95 to $8.57.

BROKER CALL:  ABN Amro Craigs rate Wakefield Health (NZX: WFD ) as hold.

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