Valuation of Attendo AB : a fundamental analysis of a nordic healthcare company

Abstract

The objective of this thesis is to estimate the intrinsic value of Attendo AB using fundamental analysis by applying a discounted cash flow valuation using the weighted average cost of capital method. A relative valuation approach is applied to support the result from the discounted cash flow method. The healthcare industry for care services in the Nordic region is thoroughly assessed, alongside a strategic analysis of firm-specific attributes and factors, in order to make assumptions about future performance of Attendo. As healthcare services in the Nordics has experienced increasing privatization, new markets for private providers have opened up. Governments in the Nordics have created healthcare reforms over the last decades in an attempt to modernize and improve the services offered in the industry. The phenomenon of an ageing population and demands for better quality and more user-autonomy, has fueled these developments. These developments are not likely to change in the foreseeable future, and the future market of care services is expected to be carried out by a higher proportion of private providers than what is the case today. In this regard, Attendo is in a strong strategic position as it is a large player with experience, in an emerging market. The result of this fundamental analysis is an estimated share price of SEK 46 for Attendo AB, which imply that the stock is currently undervalued by approximately SEK 4. Although this valuation is based upon assumptions about future performance that entails uncertainty, which is discussed in a sensitivity analysis, the overall conclusion is a sell recommendation.