Ramsay Health Care shares slide as Citi cuts target price
Make us a preferred source
Make us a preferred source on Google
The news: Shares in Ramsay Health Care lowered on the ASX as Citi lowered its target price on the hospital operator following a site tour in Western Australia last month.
The numbers: Ramsay shares were down 1.07% to $38.85 by 1:40pm AEDT, having shed around 25% since January.
Citi reduced its target price from $44 to $42 and cut its earnings-per-share forecasts by 9% in FY26 and 13% in FY27 due to a slower-than-expected margin recovery.
The context: Citi analysts said they attended some of Ramsay's largest hospitals in WA in late October. They noted that while the group expects IT investments to decline from FY26 and become net positive from FY28, it may be difficult to achieve as the current plan does not include the full cost of an electronic health record system.
The analysts also said that after analysing Ramsay's nurses enterprise bargaining agreements, labour cost growth is likely to remain stickier than they had previously anticipated, slowing margin recovery.
The federal government’s private hospital sector health check did not provide any relief for the sector, as anticipated, they noted. Meanwhile, private health insurance premium increases allowed by the government and the ensuing indexation to private hospitals remains a "key variable".
The source: Citi research
