Australian healthcare firms face lagging core business, cost pressures - Citi

Integral Diagnostics

23/01/2023 23:57

** Australian healthcare service providers will find it
difficult to outperform as core business recovery lags and
labour cost inflation persists, says Citi
    ** Citi says data on Medicare, Australia's public healthcare
system, shows benefits paid for pathology, excluding COVID-19,
rose 5% in the first five months of 1H23, while benefits paid
for imaging services climbed 3%, both in-line with forecasts 
    ** Brokerage expects earnings at Sonic Healthcare  SHL.AX 
and Australian Clinical Labs  ACL.AX  to decline over the next
two years as COVID-19 testing-related business pass its peak
    ** Citi maintains "neutral" rating on ACL, SHL and Integral
Diagnostics Ltd  IDX.AX  
    ** It expects ACL and SHL to be debt free in FY24, providing
some support to valuation
    ** Citi maintains its target price of A$3.30 for ACL, A$3.20
for IDX, and A$32.00 for SHL    
    ** Shares of ACL rise as much as 0.3% to A$3.020 
    ** Shares of IDX rise as much as 2.2% to A$3.290 
    ** Shares of SHL rise as much as 1.1% to A$31.870
 (Reporting by Udbhav Krishna P)
 ((UdbhavKrishna.P@thomsonreuters.com;))