Shares of Sonic Healthcare Ltd (ASX: SHL) demonstrated strong performance in the past week, closing up 0.6% at $22.98 on Friday. This increase marked a notable 7.8% rise during a week when the benchmark S&P/ASX 200 Index (ASX: XJO) fell by 2.5%. Despite this positive movement, Sonic’s shares are still down 16.6% over the past year, trailing the ASX 200’s modest gains of 1.1%. Notably, the company has distributed $1.07 per share in partly franked dividends during this period, resulting in a trailing dividend yield of 4.7% at the latest closing price.
The recent rally in Sonic Healthcare shares followed the company’s annual general meeting (AGM) on Thursday, which featured a trading update for the financial year 2026. The stock surged by 6.3% on the day of the AGM after management reaffirmed its guidance for earnings before interest, taxes, depreciation, and amortisation (EBITDA) for FY 2026. The forecast indicates that EBITDA will range between $1.87 billion and $1.95 billion, assuming constant currency. Achieving the higher end of this estimate would represent a 12.7% increase compared to FY 2025.
Macquarie’s Assessment of Sonic Healthcare’s Future
Taking a closer look at Sonic’s FY 2026 guidance, analysts from Macquarie Group Ltd (ASX: MQG) have highlighted several key points. The firm noted that Sonic expects approximately 54-55% of its EBITDA to be generated in the second half of FY 2026, which aligns with historical seasonal patterns. However, they also predict potential margin dilution due to recent acquisitions, including those of LADR and Swiss businesses, as well as a UK contract.
Macquarie expressed concerns regarding the potential impact of the US Protecting Access to Medicare Act (PAMA), suggesting that it may be delayed or cancelled. They have excluded the anticipated A$15 million impact of fee reductions from their guidance, in line with previous commentary from Sonic’s management.
Following the AGM update, Macquarie maintained a neutral rating on Sonic Healthcare shares but set a 12-month price target of $25.20. This target implies an upside potential of nearly 10% from the current share price. Macquarie’s analysis did not factor in the upcoming dividends, which may further enhance the appeal of Sonic shares to investors.
While Macquarie acknowledged possible synergies from Sonic’s recent acquisitions, they cautioned about ongoing margin pressures and elevated leverage in the near term. Additionally, uncertainties surrounding PAMA, decisions related to Fair Work, and the full ramifications of fee cuts remain areas of concern for the brokerage.
Investors considering positions in Sonic Healthcare should weigh these factors carefully against the backdrop of the company’s recent performance and future outlook.
