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Goldman Sachs on the fence over Sonic shares

Tom Richardson
dice labelled buy and sell rolling on a sharemarket chart

Sonic Healthcare Limited (ASX: SHL) shares have been among the best on the S&P/ ASX200 (ASX: XJO) over the past decade. The radiology and pathology business has grown organically and by overseas acquisition to now boast a market value around $14.3 billion. 

According to a November 24 research note out of Goldman Sachs the stock is probably around fair value today at $29.95. Goldman’s has a ‘neutral’ rating and $29.90 12-month share price target on Sonic. 

Goldman’s is forecasting Sonic will earn $1.23 per share over fiscal 2020 to place it on around 24.4x estimated forward earnings. For fiscal 2021 it’s estimating $1.33 in earnings per share to place it on a more palatable 22.5x earnings. However, it’s worth remembering this is an estimate out to June 30 2021. 

Zooming out a little it’s correct to say Sonic Healthcare has a second-to-none long-term track record of earnings and dividend growth amongst large-cap stocks on the local market. As such it looks worth a place towards the top of investors’ research lists. 

Elsewhere in the healthcare sector Goldman’s has a buy rating on CSL Limited (ASX: CSL) and ResMed Inc. (ASX: RMD).

The post Goldman Sachs on the fence over Sonic shares appeared first on Motley Fool Australia.

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Tom Richardson owns shares of CSL Ltd. and ResMed Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended ResMed Inc. and Sonic Healthcare Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019