Buy this ASX 200 healthcare share for a 25% return: broker

There could be big returns ahead for shareholders of this healthcare company.

| More on:
Two healthcare workers, a male doctor in the background with a woman in scrubs in the foreground,, smile towards the camera against a plain backdrop.

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

If you're looking for exposure to the healthcare sector, then Ramsay Health Care Ltd (ASX: RHC) could be the way to do it.

That's the view of analysts at Morgans, which see major upside ahead for this ASX 200 healthcare share.

What is the broker saying about this ASX 200 healthcare share?

In response to a recent trading update, the team at Morgans has retained its add rating with a slightly trimmed $75.57 price target.

Based on the current Ramsay share price of $60.58, this implies potential upside of 25% for this ASX 200 healthcare share over the next 12 months.

In addition, the broker is forecasting a 2.2% dividend yield over the next 12 months, boosting the total potential return on offer with its shares even further.

What did it say?

While the broker wasn't blown away by Ramsay Health Care's trading update, it was pleased with underlying trends. It explained:

A nine-month FY23 trading update highlighted improving volumes across all regions on increased surgical activity, although margins and profit lagged. While COVID-related headwinds are subsiding, labour shortages and inflationary pressures remain, dampening a full recovery in underlying profitability.

The good news is that Morgans expects these headwinds to ease in time and for its profits to rebound. It adds:

While the operating environment remains unpredictable and dynamic, with doctor/patient behaviour, inflation and workforce issues all defining the earnings profile, higher activity and improving (albeit slowly) productivity are suggestive of growing momentum.

All in all, the sum of the above is that the broker believes that this makes Ramsay an ASX 200 health care share to buy right now for patient investors.

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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Healthcare Shares

four excited doctors with their hands in the air
Healthcare Shares

Sigma Healthcare shares rocket 39% on Chemist Warehouse merger approval

The ACCC doesn't believe the company's merger with Chemist Warehouse will lessen competition.

Read more »

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

ASX 200 healthcare stock rockets on $75 million news

This marks another positive step for the company.

Read more »

Male doctor in a lab coat working at laptop looking serious.
Healthcare Shares

CSL shares are in the red for 2024. Are they a buy?

Meanwhile, the broader market has extended to new highs this year.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Share Market News

Guess which ASX 300 stock is jumping 11% on big news

Big news is giving this stock an even bigger lift on Tuesday. What's happening?

Read more »

Two lab workers fist pump each other.
Healthcare Shares

Guess which ASX 200 healthcare stock is starting the week with a bang on big news!

What is getting investors excited today? Let's find out.

Read more »

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

3 small-cap ASX healthcare shares 'with strong prospects'

Fund manager IML discusses why these 3 ASX healthcare shares are likely to rise in value.

Read more »

Shot of a scientist using a computer while conducting research in a laboratory.
Healthcare Shares

2 All Ords ASX healthcare shares making BIG moves on quarterly updates

These two ASX healthcare companies are seeing heavy trading on Thursday.

Read more »

A woman reclines in a comfortable chair while she donates blood holding a pumping toy in one hand and giving the thumbs up in the other as she is attached to a medical machine to collect her blood donation.
Healthcare Shares

'Trading at a discount': Why now is the time to buy CSL shares

This investing expert says CSL shares now represent an appealing buying opportunity.

Read more »