SHL – Citi rates the stock as Hold, Medium Risk

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Regard this as an official warning: further research has taught Citi analysts that competition in Australia’s diagnostic services sector is more intense than previously believed. This means profit margins for the players inside the industry will likely suffer more. The analysts don’t believe this realisation has trickled through in Mr Market’s mind to the full extent.

EPS forecasts have been cut for all major players, including Sonic, Primary ((PRY)) and HealthScope ((HSP)). Having said all this, the impact on Sonic’s forecasts appears to have remained benign. Target price has declined to $14.07 from $14.30 previously.

Sector: Health Care Equipment & Services.

Target price is $14.07.Current Price is $14.23. Difference: ($0.16) – (brackets indicate current price is over target). If SHL meets the Citi target it will return approximately -1% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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