Although the S&P/ASX 200 Health Care (Index: ^AXHJ) (ASX: XHJ) has put on an incredible gain of 14% year-to-date, not all shares in the sector have performed so strongly.
Two shares which have thoroughly underperformed the S&P/ASX 200 Health Care index this year are listed below. Is it time to snap them up?
The Japara Healthcare Ltd (ASX: JHC) share price performance this year certainly has been a huge disappointment. At the time of writing the aged care operator's shares are down almost 25% year-to-date. A good portion of this decline came in the last month following disappointing FY 2018 guidance. But whilst EBITDA is expected to be flat in FY 2018, management remains confident that it will return to growth in FY 2019 as developments complete and fee indexing resumes. This could make it an opportune time to snap up shares with a long-term view.
The Ramsay Health Care Limited (ASX: RHC) share price has fallen over 9% since this time last month. This decline is largely down to the private hospital operator advising that growth would be slower in FY 2018. Management expects core earnings to grow between 8% and 10% this year, compared to 13% in FY 2017. Whilst this is a slight disappointment, I think it is important to remember that Ramsay is one of the best positioned Australian companies to benefit from ageing populations. I think this makes it a great buy and hold investment and good value at 28x earnings.