October’s Medicare stats indicated a grim industry outlook and now MYEFO has brought substantial cuts to pathology and imaging benefits. US Medicare has proposed changes to become effective in 2017 and Citi also expects a fee cut in Germany, all of which are negative for Sonic.
Citi has cut its FY16 earnings forecasts by 15-21% over FY16-18, leading to a reduction in target to $16.04 from $22.01 and a downgrade to Sell from Buy.
Sector: Health Care Equipment & Services.
Target price is $16.04.Current Price is $18.50. Difference: ($2.46) – (brackets indicate current price is over target). If SHL meets the Citi target it will return approximately -15% (excluding dividends, fees and charges – negative figures indicate an expected loss).