DMG downgrades Thomson Medical Centre (5FV.SG) to Neutral from Buy after 38% rally in last 2 months, with shares now trading at 19x FY10 P/E, according to Dow Jones.

“Given that Thomson Medical is a niche obstetrics and gynaecology provider, and that growth is somewhat limited by capacity, we hold the opinion that it should trade at a discount to regional peers’ average” of 21x forward P/E, says DMG.

Research house notes Thomson Medical now running at almost full capacity: “There is only so much more that Thomson Medical can do in order to accommodate more patients and deliveries. Hence, we think that growth from hospital operations would be limited.”

Still, lifts target price to $0.94 from $0.88 after raising FY10-11 earnings estimates by 8%-7% to account for higher margins on back of increased utilization. Shares off 1.0% at $0.985.