Sonic Healthcare (SHL) Shares Tip

Sonic Healthcare (SHL) have a share price target of $17.08 from shares analyst Citigroup Investment Research. The price target has been revised upwards by 12.3 percent. Sonic Healthcare have acquired American Esoteric Laboratories Inc. (AEL) for an EV of US$180m with settlement mid January 2007. This lifts revenues in the USA by 51% to an estimated $396m. The new acquisition strengthens Sonic Healcare's presence in Texas and Tennessee, with four more laboratories, the newest of which in Dallas is to be closed prior to completion of the sale. This volume will be relocated to Tyler, Texas. Revenue split is 2/3 Tennessee and 1/3 Texas, so around US$30m of sales will be consolidated in the one Texan plant. In addition, patient centre rationalisation between Tyler and CPL in eastern Texas will lead to further rationalisation benefits. SHL will become a larger player in the USA as a result of this acquisition. This may make the two largest competitors, Quest and Labcorp with 60% market share of the private pathology market, become more aggressive in SHL’s territories when contracts are negotiated. Intangibles probably exceed $500m, so underpinning cashflow is important.

Sonic Healthcare Limited is listed on the Australian Stock Exchange (ASX) under stock code SHL. You can view their investor website here. SHL was listed on the ASX on 9 August, 1971. Find out the meaning of the recommendations in this primer. Sonic Healthcare provides pathology services. Dr Colin S Goldschmidt is the Managing Director of Sonic Healthcare and Barry Patterson the Chairman. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade SHL. Check your charts and good luck with your share trading!