The FY11 headline net profit was in-line, but the broker notes that on a trading basis, the company booked a "strong" result when compared to global peers.
However, some undisclosed purchases and higher debt margins have seen the company’s interest costs rise some 30%. That, and a slightly higher tax rate were certainly not expected, notes the broker.
The broker notes the higher interest will take a bite from earnings, as will weaker market. Thus, the price target is cut to $10.60 (from $12.00), seeing the recommendation dropped to Sell from Neutral.
Sector: Health Care Equipment & Services.
Target price is $10.60.Current Price is $11.29. Difference: ($0.69) – (brackets indicate current price is over target). If SHL meets the UBS target it will return approximately -7% (excluding dividends, fees and charges – negative figures indicate an expected loss).