Sonic Healthcare (SHL) is one of the world’s largest medical diagnostic companies. SHL provides specialised pathology/clinical laboratory and diagnostic imaging (including radiology) services to clinicians (GPs and specialists), hospitals, community health services, and their patients.
“First half results were in line, with strong organic revenue growth and good cost control supporting margins and operating cash flow (OCF),” Raymond said.
“Underlying pathology performed well, with growth across all key geographies, while Radiology also showed strength on the continuing trend towards higher value modalities, but Clinical Services remains soft on lower GP attendances.
“Promisingly, after years of trying to right-size the cost base to better reflect the post-Covid-19 world, labour costs are “just about there”, with operating leverage returning and profitability improving.
“Given the likelihood for continued strong underlying revenue growth and a cost base approaching steady state levels, not to mention normal seasonality, we view financial year 2025 earnings before interest, tax, depreciation and amortisation (EBITDA) guidance (A$1.7-1.75 billion) as achievable, if not conservative, with acquisitions/contract gains lending additional support over the medium-term.
“We adjust financial year 2025-2027 underlying estimates modestly, with our target price decreasing to A$31.36.
“We regard SHL as an ADD to an investor’s portfolio,” Raymond said.
Sonic Healthcare (SHL) – last 12 months
Source: nabtrade
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