The Ramsay Health Care Limited (ASX: RHC) share price is up 1.1% to $71.37 in trade today after financial news wires reported that broker Ord Minnett has slapped an "accumulate" rating and $80 "share price target" on the hospital operator.
Ramsay's shares have been under pressure after its rainmaker CEO Chris Rex announced his intention to leave the business in 2017, with a new CEO now lined up to take charge on July 3 of this year. Mr. Rex has been the boss at Ramsay for a past 13-year period that has seen Ramsay shares climb more than 2,000% thanks to its growth-by-acquisition strategy.
No wonder investors got nervous when Mr. Rex followed up the announcement of his departure with the sale of some 400,000 shares worth around $27 million, as the share price reversed course to sell for less than $63 in March.
Fortunately Ramsay has been able to appoint an experienced internal candidate to succeed the outgoing CEO and the analyst community remains generally optimistic about the future.
Ord Minnet is reportedly forecasting another year of double-digit earnings growth in FY 2018 for Ramsay and believes the election of President Macron in France will be a net positive to Ramsay's hospital businesses.
Ramsay itself is forecasting earnings per share growth of 12%-14% for FY 2017 with analysts' expectations for $2.63 in earnings per share this year placing it on around 27x estimated earnings. If Ramsay can deliver more double-digit earnings growth in the years ahead it will most likely be good value at today's prices and like Ord Minnett I think the stock looks a buy today.
