Two stocks with massive falls on ASX – Healthscope Ltd and Ramsay Health Care Limited

Healthscope Ltd

 

HSO Details
· Slower than expected revenue growth in the Hospitals in the first quarter of FY 17: Healthscope Ltd (ASX: HSO) stock fell over 18.77% on October 21, 2016 after the company provided an update on the trading conditions for the first quarter of FY17. HSO has experienced slower than expected revenue growth in the Hospitals in the first quarter 2017. However, HSO is confident that the industry fundamentals have not changed and the long-term demand outlook for the Hospitals division is strong. HSO is investing significant capital in its hospital expansion program while focusing on the key hospitals located in high growth corridors with ageing demographics. HSO is going to complete seven projects over the past 12 months, including the three major projects at Gold Coast Private, Knox Private and National Capital Private. Additionally, HSO has also made excellent progress in the construction of the landmark Northern Beaches Hospital. Meanwhile, HSO stock rose 8.12% in the last six months as on October 20, 2016.

· Recommendation: Long term investors can continue to “Hold” the stock at the current price of $ 2.38
 

FY16 Financial Performance (Source: Company Reports)

Ramsay Health Care Limited

RHC Details
· Completed brownfield capacity expansions: Ramsay Health Care Limited (ASX: RHC) stock fell over 5.87% on October 21, 2016, following its peers. The group announced for a distribution of $2.38 to be paid on April 20, 2017.  RHC has reported a 16.8% growth in the core net profit after tax (Core NPAT) to $481.4 million in FY 16 and an 18.1% growth in the group revenue to $8.7 billion. As per RHC, the company’s segments have performed at or above expectations. RHC has completed over $300m in brownfield capacity expansions across the group by opening over 500 beds and 26 operating theatres. Moreover, in FY 17 RHC expects the Core NPAT and Core EPS growth for the group to be 10% to 12%.

· Recommendation: RHC stock has risen over 26.14% in six months as on October 20, 2016, while we give a “Hold” recommendation on the stock at the current price of $ 74.80


FY16 Financial Performance (Source: Company Reports)

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