After a trading update by Ramsay Health Care, Morgans believes the near-term outlook is increasingly challenged as the pandemic makes forecasting difficult.
While surgical volumes were up across the board, the broker describes the first quarter as mixed. There were signs of recovery in Australia, but higher cost weighed on profits.
Management noted “surgical restrictions, regional outbreaks and lower demand for some services, combined with higher costs associated with operating in the current environment, have all impacted the results”.
The analyst continues to view the pandemic as a psychological crisis, with patient behaviour negatively impacting the procedural mix and doctors a capacity constraint.
The Hold rating and target of $62.31 are unchanged.
Sector: Health Care Equipment & Services.
Target price is $62.31.Current Price is $67.60. Difference: ($5.29) – (brackets indicate current price is over target). If RHC meets the Morgans target it will return approximately -8% (excluding dividends, fees and charges – negative figures indicate an expected loss).