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.
