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Why the Ramsay Health Care share price hit a 52-week high today

The Ramsay Health Care Limited (ASX: RHC) share price has been amongst the best performers on the Australian share market on Monday.

This afternoon the private hospital operator’s shares climbed as much as 8% to a 52-week high of $69.88.

Why did the Ramsay share price hit a 52-week high?

With no news out of the company, the shock Coalition win at this weekend’s Federal election appears to have been the catalyst for this strong share price gain.

Labor had been planning to put a 2% cap on premium increases by private health insurers such as Medibank Private Ltd (ASX: MPL) and NIB Holdings Limited (ASX: NHF) if it won the election.

Whereas the Coalition government had no official stance of premiums, which the market appears to believe will mean business as usual for Medibank and NIB.

This would be good news for Ramsay as there were concerns that the private health insurers would pressure private hospital operators to lower prices to compensate for the lower premium increases. This could have weighed on Ramsay’s margins and potentially limited its profit growth over the medium term.

One broker that believes the election result was a win for Ramsay is Ord Minnett. According to a note out of the broker, its analysts have upgraded the company’s shares to an accumulate rating and lifted the price target on them by a massive 25% to $75.00. This price target implies potential upside of over 7% excluding dividends even after today’s strong gain.

Ord Minnett’s analysts believe the combination of this election result and improved tariffs in France and the UK means that Ramsay’s outlook has improved notably.

Elsewhere in the healthcare sector, Pro Medicus Limited (ASX: PME) and Volpara Health Technologies Ltd (ASX: VHT) shares are also charging higher and are up 4.5% and 6%, respectively, in late trade.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia has recommended NIB Holdings Limited, Pro Medicus 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.

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