US Medicare has proposed reductions to fees for 2018. Medicare is seeking public comment until October 23 and final rates will be subsequently published.
The US represents 22% of the company’s revenue in FY17 and Credit Suisse notes around 20% of US revenue is funded by Medicare. The broker’s calculations, assuming price reductions of -9.5% in 2018 and -7.5% in 2019, results in a downgrade to net profit estimates of -3% over the forecasts.
Target is reduced to $21.40 from $22.40. Underperform retained.
Sector: Health Care Equipment & Services.
Target price is $21.40.Current Price is $21.42. Difference: ($0.02) – (brackets indicate current price is over target). If SHL meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges – negative figures indicate an expected loss).