The JSE’s spluttering health-care stocks have taken on a jaundiced hue. Over the past three months, Aspen’s stock has slid 9.5%, Mediclinic’s has lost 15.8%, Netcare’s has shed 15.8% and Life Healthcare’s has fallen 12.3%. Over the past year only Mediclinic’s has risen. Investors who have observed this sickly performance will be wondering whether they should sit tight and wait for the fever to pass, or just give up hope. The frailty seems counterintuitive too, considering the notoriously erratic government health sector. So what happened? Sean Ungerer, analyst at Arqaam Capital, says a number of factors conspired against these stocks. "Top-line revenues are under pressure, and margins are too, from a cost point of view," he says. The margins of Netcare and Life, particularly, have dropped. And this year isn’t likely to be much different, he says. Analysts still rate Netcare, SA’s largest hospital group, with 114 hospitals, as a "buy". But like many hospital operations, it is dealing...

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