The Ramsay Health Care Limited (ASX: RHC) share price could be on the move later this month when it releases its results.
Ahead of the release of the private hospital operator’s results on 27 August 2020, I thought I would look to see what analysts are expecting from the company.
What should you expect from Ramsay Health Care in FY 2020?
According to a note out of Goldman Sachs, its analysts believe Ramsay could fall short of the market’s expectations later this month.
Its analysts are forecasting FY 2020 revenue of $12,021 million, up 3.6% on the prior corresponding period. However, this will be a touch short of the consensus estimate of $12,175 million.
Goldman doesn’t expect this top line growth to flow through to its earnings. It has forecast earnings before interest, tax, depreciation, and amortisation (EBITDA) of $1,273 million. This will be a 20% decline on FY 2019’s EBITDA and compares to the consensus estimate of $1,578 million.
And on the bottom line, the broker is forecasting earnings per share of $1.53 in FY 2020, which will be a 46% decline year on year. As a comparison, the market consensus estimate is for earnings per share of $1.63.
What about FY 2021?
Most investors have accepted that Ramsay’s FY 2020 will be underwhelming because of the pandemic, so their focus will be on the year ahead.
Goldman Sachs is forecasting a 12% increase in revenue to $13,481.1 million in FY 2021. From this, it expects Ramsay’s EBITDA to rebound 25% to $1,589.9 million. This means it will be back in line with its pre-pandemic levels.
Should you invest?
While Goldman only has a neutral rating and $63.00 price target on Ramsay’s shares, I’m a little more bullish and would class them as a buy.
Just as long as you’re prepared to make a patient long term investment. The near term may be difficult, but I believe it has a very positive long term outlook. Overall, I feel it could beat the market over the 2020s.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended 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.
The post Earnings preview: What to expect from the Ramsay Health Care FY 2020 result appeared first on Motley Fool Australia.
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