Citi sees costs biting into Australia's Ramsay Health Care's profitability

Ramsay Health Care

05/11/2024 22:48

** Citi sees costs weighing on Australia Ramsay Health Care
 RHC.AX  as the healthcare operator's investments in technology
in FY25 are expected to materialize into profitability only by
FY28
    ** Brokerage says gross investments of RHC projected to peak
in FY27 and become a net EBIT benefit in FY28 as savings
outweigh investments 
    ** Sees nursing staff wage growth to increase to over 4.5%
per annum in FY26-27 from about 4% in FY25
    ** Citi says employee costs take up ~57% of RHC's revenue, a
significant proportion of which are for nursing staff
    ** Maintains "neutral" rating and cuts price target to A$42
from A$44
    ** RHC down 25.4% YTD as of last close vs a 4.5% gain on the
ASX 200 Health Care index  .AXHJ 
    

 (Reporting by Nikita Maria Jino in Bengaluru)
 ((Nikita.Jino@thomsonreuters.com))