UBS forecasts revenue growth of 10% for Sonic Healthcare in FY20, mostly driven by pathology in the second half. Earnings for the year are expected to be down -7% versus last year.
The broker assumes covid-19 testing rates to keep increasing in the third quarter of 2020 before declining in the last quarter of the year. The increase in testing revenues in FY21 will be somewhat offset by routine volume declines, believes the broker.
The company will announce its FY20 results on August 20.
The pathology valuation looks full, comments UBS, retaining its Sell rating with a target price of $28.
Sector: Health Care Equipment & Services.
Target price is $28.00.Current Price is $33.12. Difference: ($5.12) – (brackets indicate current price is over target). If SHL meets the UBS target it will return approximately -18% (excluding dividends, fees and charges – negative figures indicate an expected loss).