Although the Ramsay Health Care Limited (ASX: RHC) share price has now climbed 10% since hitting a 52-week low of $51.89 in the middle of October, it is still down significantly over the last 12 months.
During this time the private hospital operator's shares are down approximately 18%.
Is the Ramsay Health Care share price in the buy zone?
Whilst I think that Ramsay Health Care is one of the highest quality companies on the Australian share market along with the likes of healthcare sector peers CSL Limited (ASX: CSL) and ResMed Inc (ASX: CSL), the tough trading conditions that it continues to face means it is a little too soon for an investment for me.
The recent acquisition of Capio AB could be a boost to its growth in the long term and could open the door to further bolt-on acquisitions in Scandinavia, but it isn't expected to contribute in the near term. Management recently advised that the acquisition is expected to have a neutral impact on its earnings in FY 2019.
As a result, Ramsay Health Care continues to target core EPS growth of just 2% this year.
Unfortunately, with the tough trading conditions it is facing showing little sign of easing, I suspect that growth in FY 2020 could be equally challenging for the company.
I feel this makes the company's shares reasonably expensive at 22x earnings and see more value elsewhere in the sector with the likes of CSL and ResMed.
Alternatively, fast-growing mid cap healthcare shares such as infection control specialist Nanosonics Ltd (ASX: NAN) and imaging software company Pro Medicus Limited (ASX: PME) could be worth a look.
Although both shares trade at a notable premium to the market average, I believe their growth profiles go some way to justifying this.
