The Sonic Healthcare share price has sunk over the past few months. Here’s a closer look at the company and what may happen to the share price once COVID is under control.
The post What’s up with the Sonic Healthcare (ASX:SHL) share price? appeared first on The Motley Fool Australia. –
The Sonic Healthcare Limited (ASX: SHL) share price has been sliding the last couple of months, although this morning it opened higher and is trading at $31.51 at the time of writing.
Why has the Sonic Healthcare share price been losing ground?
The Sonic Healthcare share price has lost ground recently — down 9% in the past month and 0.57% lower than this time 6 months ago.
However, according to the Australian Financial Review, record volumes are still being traded in Europe and the US.
Sonic is a business that benefitted greatly from the coronavirus pandemic. The world’s third-largest medical laboratory company reported a 166% increase in profits during its last earnings report. Sonic’s first half FY 2021 net profit totalled $678 million.
With COVID testing an obvious driver of Sonic’s latest results, some investors are wondering if the business will be able to maintain the momentum going forward.
Will the coronavirus keep Sonic afloat?
As COVID-19 continues to be wrangled around the world, Sonic believes that there will be ongoing opportunities.
According to the AFR piece, Sonic CEO Colin Goldschmidt advised investors that he believes the market for serology testing will increase as a product of COVID. He also thinks a surge in testing demand is on the horizon as the vaccination distribution continues to grow.
However, one analyst commented that he feels that the need for testing is going to drop. Dr Saul Hadassin of UBS is neutral on the stock and has a target price for the Sonic share price set at $35.30.
He said (as quoted by AFR): “I did not move to a ‘buy’ as we felt the benefits they are accruing related to COVID testing would last about 18 to 24 months.”
The Sonic Healthcare share price has gained 6% on this time last year. The company has a market capitalisation of $15 billion with 477.8 million shares outstanding.
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Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.