Ramsay Health Care Ltd (ASX: RHC) shares are edging lower today.
Shares in the S&P/ASX 200 Index (ASX: XJO) healthcare stock closed yesterday trading for $55.56. In morning trade on Tuesday, shares are changing hands for $55.49 apiece, down 0.1%.
For some context, the ASX 200 is up 0.2% at this same time.
Taking a step back, Ramsay Health Care shares have surged 75.9% since this time last year, smashing the 12-month 1.9% losses posted by the benchmark index.
And that's not including the two fully-franked dividends, totalling 91 cents a share that the ASX 200 healthcare stock paid out over the full year. At the current share price, Ramsay Healthcare trades on a fully-franked trailing dividend yield of 1.6%.
Despite that strong outperformance, Merlon Capital Partners co-portfolio manager Joey Mui believes the stock is still undervalued (courtesy of the Australian Financial Review).
Here's why.
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ASX 200 healthcare stock with further upside
Asked which stock his fund owns that's most undervalued by the market, Mui pointed to private healthcare provider Ramsay Health Care.
"We believe Ramsay is still significantly undervalued," he said.
Explaining his bullish outlook on the resurgent ASX 200 healthcare stock, Mui said:
The market has been cautious about its ability to offset inflation, but we see a strong opportunity to lift margins – through higher theatre utilisation, a better mix of specialities, and cost indexation from insurers. The new management team under Natalie Davis is executing on these strategies well.
What's the latest from Ramsay Health Care?
Ramsay Health Care shares closed up a blistering 13.7% on 27 August, following the release of the company's full-year FY 2026 results.
For the 12 months to 30 June, the ASX 200 healthcare stock reported underlying earnings before tax (EBIT) of $1.16 billion, up 11.5% year on year.
And on the bottom line, Ramsay achieved an underlying net profit after tax (NPAT) of $364 million, up 19.3% from FY 2025.
Commenting on the strong results, Ramsay Health Care CEO and managing director Natalie Davis said, "FY26 was a year of continued improvement and delivery for Ramsay, with group underlying NPAT up 23% (in constant currency) year-on-year, all regions delivering EBIT growth, high patient NPS and clinical excellence across the group."
Looking to what's ahead for the company in FY 2027, Davis added:
We will continue to build on Ramsay's clinical excellence in Australia for the benefit of our patients, by investing in clinical innovation and connecting hospital and healthcare services in our priority therapeutic areas – cardiology, orthopaedics and cancer care, to be Australia's most trusted leading healthcare provider and to grow long-term shareholder value.
