While Sonic Healthcare’s 1h results were in-line with expectations, Morgans lowers its rating to Hold from Add and slashes its target price to $39.93 from $50.72. It’s felt covid testing will inevitably slow placing downward pressure on profits.
The broker suggests no FY22 guidance reflects the pandemic’s uncertain trajectory. However, it’s stressed the company remains in a strong position for ongoing base business growth and has ample liquidity for capital management and M&A.
Reagarding the results, operating margins expanded 290bps to 32.4%, an all-time high.
Sector: Health Care Equipment & Services.
Target price is $39.93.Current Price is $36.25. Difference: $3.68 – (brackets indicate current price is over target). If SHL meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges – negative figures indicate an expected loss).
