Ramsay Health Care Limited (ASX: RHC) shares are higher today, despite a research note out of Goldman Sachs suggesting shareholders should sell.
According to Goldman’s the shares are overvalued with its analysts only reaching a $61 12-month share price target, compared to the $73.20 price that shares change hands for today.
Goldman’s is forecasting three-year compound sales and earnings per share growth of 6% and 3% respectively and claims this is below its sector peers.
The analysts are worried that private health insurance uptake in Australia is low, while cost inflation for hospital staff is climbing as nurses and doctors demand more pay. According to Goldman’s nurses’ wages can equate up to 70 per cent of a hospital’s operating costs in Australia.
Ramsay has also expanded aggressively by acquisition into France and the UK. Both of which are large markets that face challenges around the rates of private health insurance and public sector funding.
Elsewhere Goldman’s is ‘buy’ rated on CSL Limited (ASX: CSL) and ResMed Inc. (ASX: RMD) shares.
The post Goldman Sachs tips Ramsay shares as a sell appeared first on Motley Fool Australia.
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Tom Richardson owns shares of CSL Ltd. and ResMed Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended Ramsay Health Care Limited and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019