Fresenius Medical Care Shares Tank After Profit Warning

   By Donato Paolo Mancini

Shares in Fresenius Medical Care AG & Co. KGaA (FME.XE) fall sharply in early trading after the company cut its outlook, a move that prompted parent company Fresenius SE & Co. KGaA (FRE.XE) to ease its guidance lower, too.

Berenberg analysts suggested full 2019 guidance for Fresenius Medical wouldn't come until February, ushering in a period of uncertainty that would be exacerbated by current market volatility. Investors have generally been wary of softness across the U.S. healthcare market, especially in the dialysis business in which Fresenius operates.

At 0758 GMT, shares in Fresenius were trading 10% lower at EUR61.90, while shares in Fresenius Medical Care were 15% lower at EUR73.18.

Rather than being affected by one large item, Fresenius Medical Care's guidance cut appears to have come from a series of small negatives, including a legal charge and lobbying expenses related to an upcoming ballot item in California that could limit profits for dialysis companies in the state, says Brian Garnier.

Excluding one-offs, however, Berenberg considers the company's results largely in line with expectations.

Nevertheless, uncertainty will weigh on shares, analysts said.

"The share price is likely to remain under pressure until the results of the California ballot on Nov. 6," analysts at Bryan Garnier said.

Berenberg said the company is unlikely to give full guidance at the time of third-quarter results, likely shepherding in a period of market uncertainty.

"The issue is not the hit to 2018, but the outlook for 2019," Berenberg said. "In these market conditions, uncertainty is the last thing FMC's shareholders need."

Berenberg said Fresenius Medical Care has gone through weak periods before and has a relatively good track record of returning to growth in relatively quickly. Because there is little information on what has caused a weaker outlook, Berenberg thinks this could become a buying opportunity.

Write to Donato Paolo Mancini at donatopaolo.mancini@dowjones.com; @donatopmancini

(END) Dow Jones Newswires

October 17, 2018 04:39 ET (08:39 GMT)

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