MENU

Ramsay Health Care Limited (ASX:RHC) shares are down over 5% this week

It has been another disappointing week for the Ramsay Health Care Limited (ASX: RHC) share price.

With the private hospital operator’s shares down 2% today, its week-to-date decline is now 5.5%.

Why are Ramsay Health Care’s shares on the decline?

Investors have been heading to the exits in their droves this week after one of its rivals in the UK warned about tough trading conditions.

Overnight on Monday the shares of UK private hospital group Spire Healthcare fell sharply after it warned that its earnings were going to be materially lower this year because of National Health Service spending cuts.

According to the Financial Times, private hospitals in the country have been struggling from NHS cutbacks and the relaxation of rules on patient waiting times.

NHS hospitals are no longer being fined for failing to treat patients within 18 weeks. This has resulted in a meaningful decline in the number of people referred to the private sector.

In addition to this, insurers have been restricting claims to cut costs and, like in Australia, weakness in private health insurance participation levels has weighed on the market.

Should you buy the dip?

While Ramsay’s UK business is only a small part of its overall revenue, this weakness is yet another thing that could drag on its performance over the medium term.

Because of this I am sceptical that it will be able to generate enough growth to justify the premium that its shares are trading at today. And while it could generate growth organically through brownfield expansions or acquisitions, I don’t think it will be enough to offset the underperformance of its core Australian business.

In light of this, I would suggest investors skip Ramsay and focus on other healthcare shares such as Cochlear Limited (ASX: COH) and CSL Limited (ASX: CSL).

Alternatively, these top growth shares could be even better investments in FY 2019.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Cochlear Ltd. and Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.