Analysis of Sonic Healthcare’s contribution to virus testing leads the broker to upgrade its revenue assumptions for FY21. The broker assumes a reduction in routine pathology earnings will be fully offset by increased testing earnings, and total earnings may well be above pre-virus levels.
But trading on an enterprise multiple of 14.4x, some 32% above US peers, Sonic remains too rich for the broker. Target rises to $28.00 from $26.75, Sell retained.
Sector: Health Care Equipment & Services.
Target price is $28.00.Current Price is $32.59. Difference: ($4.59) – (brackets indicate current price is over target). If SHL meets the UBS target it will return approximately -16% (excluding dividends, fees and charges – negative figures indicate an expected loss).
