Primary Health Care Limited (ASX:PRY) share price sinks lower on bearish broker note

One of the worst performers on the market on Tuesday has been the Primary Health Care Limited (ASX: PRY) share price.

In afternoon trade the leading pathology and GP network operator’s shares are down 4% to $2.36.

Why are Primary Health Care’s shares tumbling lower?

With no news out of the company, today’s decline is likely to be attributable to a note out of Goldman Sachs this morning.

It has initiated coverage on both Primary Health Care and Sonic Healthcare Limited (ASX: SHL) in its note. And while it has placed a neutral rating on Sonic Healthcare’s shares, it hasn’t been so kind to Primary Health Care.

According to the note, it has slapped a sell rating and $2.23 price target on the company’s shares.

Why is Goldman Sachs bearish on Primary Health Care?

Goldman believes that things are likely to get worse for the company before they get better.

The broker believes that its Pathology business could be a drag on its performance this year. It expects the business to be negatively impacted by lower volumes caused by an Australian flu season which was the most benign since 2013.

But there are potential positives on the horizon that could make Primary Health Care worth considering in the future.

Goldman sees a lot of promise from its Medical Centres business. This business has faced a series of challenges in recent times and been largely responsible for its share price underperformance since FY 2015.

And while the broker believes it is too early to call the bottom here, if and when this business can be turned around, its analysts see a significant amount of value accretion.

In respect to Sonic Healthcare’s neutral rating, the broker feels the global pathology provider’s shares are priced correctly to account for the risks facing its U.S. business and pricing reforms in Germany.

What now?

While Goldman may not be bullish on these two shares or private health insurer Medibank Private Ltd (ASX: MPL), it recently gave Australia and New Zealand Banking Group (ASX: ANZ) a buy rating.

I agree with this rating and think it is well worth considering the bank if you haven’t already got meaningful exposure to the sector.

But if you're not keen on the banks then check out this fast-growing dividend share which has also been tipped as a buy.

OUR #1 dividend pick to grow your wealth now is revealed for FREE here!

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!