Ramsay’s UK NHS admissions rose 1.8% year on year in August — a good result, the broker notes, given an 8.0% increase in FY19 — however 12-month rolling growth eased to 3.0% from 3.4%. Current admissions and a tariff increase bode well for NHS revenue in FY20, but the increased use of agency nurses to handle the workload reduces margin expectations, the broker points out.
Australia (78% of earnings) remains the main driver at a time private hospital insurance participation is waning. But the strain on the public system may lead to necessary outsourcing to the private system. The broker awaits an update at the AGM next month. Neutral and $68.40 target retained.
Sector: Health Care Equipment & Services.
Target price is $68.40.Current Price is $66.65. Difference: $1.75 – (brackets indicate current price is over target). If RHC meets the UBS target it will return approximately 3% (excluding dividends, fees and charges – negative figures indicate an expected loss).
