The Ramsay Health Care (ASX:RHC) share price has tumbled 7% this month. Is it a buy?

Is now the time to buy Ramsay shares?

| More on:
A male doctor wearing a white lab coat shrugs his shoulders and holds his hands up in the air looking confused

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Ramsay Health Care Limited (ASX: RHC) share price has been underperforming in 2021.

Since the start of the year, the private hospital operator's shares have risen just 5.5%. This follows a 7% decline so far in November.

Is the Ramsay share price good value now?

The subdued performance of the Ramsay share price this year has been driven by concerns over the difficult trading conditions the company is facing in Australia from lockdowns.

The good news, though, is that the team at Goldman Sachs believe this underperformance is a buying opportunity for investors.

According to a recent note, the broker has reiterated its buy rating and $74.00 price target on its shares.

Based on the current Ramsay share price of $66.20, this implies potential upside of approximately 12% for investors over the next 12 months.

Goldman is also forecasting a dividend yield of approximately 2% in FY 2022, bringing the total return on offer to ~14%.

Why does Goldman like Ramsay?

Goldman continues to highlight Ramsay as one of the more attractive recovery trades across its coverage.

It commented: "RHC's operating performance in 1Q22 was heavily impacted by various restrictions, lockdowns and other challenges associated with the pandemic. However: 1) these dynamics were widely understood (and experienced by most) prior to today; and 2) positive revenue growth (+1.3%) was ahead of our expectations given the severity of disruption during the period (widespread elective surgery bans/restrictions, isolation orders/lockdowns and infection-driven staffing shortages/procedure cancellations)."

"Despite these challenges, growth was positive in each of UK (+21%), Europe (+5%) and Asia (+15%), as the extent of volume recovery more than offset the impact of Covid-driven disruption and, whilst operating performance remains some way below pre-Covid levels, an improving trajectory is clear, and we believe the set-up for 2022 looks favourable," the broker added.

All in all, Goldman Sachs appears to believe it could be worth sticking with the Ramsay share price and sees strong returns on the horizon.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

A man clenches his fists in excitement as gold coins fall from the sky.
Broker Notes

These ASX 200 shares could rise 20% to 35%

These shares are being tipped to deliver market-beating returns by analysts.

Read more »

Keyboard button with the word sell on it.
Broker Notes

8 ASX All Ords stocks downgraded to sell ratings

Find out which shares are out of favour with the experts.

Read more »

Woman smiling whilst shopping in a clothing store.
Dividend Investing

Why this quality ASX 300 dividend stock is tipped to surge 54%

A leading fund manager forecasts significant outperformance from this quality ASX 300 dividend stock.

Read more »

A group of businesspeople clapping.
Broker Notes

Bell Potter names more of the best ASX 200 stocks to buy in June

These stocks could be best buys this month according to the broker.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Broker Notes

Why Macquarie forecasts this ASX All Ords media company is set to surge 19%

Up 42% in 2025, here’s why this ASX All Ords media stock could keep racing higher into 2026.

Read more »

Excited couple celebrating success while looking at smartphone.
Broker Notes

Buy this ASX 200 stock for a 50% return: Bell Potter

Let's see why the broker is bullish on this name.

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Broker Notes

Leading broker tips 50%+ upside for IDP Education shares

The team at Macquarie thinks this beaten down stock could be a buy.

Read more »

Red buy button on an apple keyboard with a finger on it representing asx tech shares to buy today
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »