Increasing covid testing by Australian Clinical Labs in the first four months of FY22 has resulted in another profit guidance upgrade, this time 35% ahead of last month’s upgraded guidance. Citi expects more 1H upgrades, given the company is using prospectus forecasts.
The broker raises its target price to $5 from $4.50. A Neutral rating is retained, assuming a normalisation of growth to around 5%. After reducing debt estimates and normalising dividend forecasts, Citi expects a net cash figure of $67m by close of FY22.
Sector: Health Care Equipment & Services.
Target price is $5.00.Current Price is $4.23. Difference: $0.77 – (brackets indicate current price is over target). If ACL meets the Citi target it will return approximately 15% (excluding dividends, fees and charges – negative figures indicate an expected loss).
