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Is SHL a buy, hold or sell at current prices. It’s a stock which seems to ‘run under the radar’. Is it currently above fair value having done well in 2013 after a few years in the doldrums?
A: Thanks for the question about Sonic Healthcare.
While the valuation metrics aren’t out of the ordinary, it did have a pretty good run in 2013. According to FN Arena, the consensus broker target price at $16.83 is very close to the current share price, and broker sentiment is marginally positive at +0.5 (-1.0 most negative, +1.0 most positive).
Being a fan of the sector and noting Sonic’s exposure to a falling AUD (about 47% of the revenue comes from offshore), I don’t think I am a seller. That said, I am a little wary about buying after such a strong rise and so am going to sit on the fence and say it is a ‘hold’.
Sonic reports next Tuesday (18 Feb) – and we should get a good insight as to whether their US business has been feeling the pinch or not.
Regards.
