SHL - Sonic Healthcare

[RichKid]

Bought into SHL recently after the breakout to new highs. Has stepped through the ex-div date reasonably well, currently hitting higher highs after gapping up last week through the previous resistance. Buy depth is hard to judge but very few sell orders compared to the buy side. Recent move to US market saw a rerating imo and there is more news to come from the UK according to analysts. Here's the chart. This is what tech refers to imo when he talks of buying high and selling higher, nice long term uptrend with fully franked divs as a bonus. SHL is what you would call a 'defensive' stock due to the type of business it runs. (Not all breakouts work-out so this is by no means a low risk entry opportunity).

[Burnham]

Good call and I was tempted myself BUT large intra day swings make me wary,the depth you alluded to can make an exit difficult and stock may have lost momentum ? (or healthy consolidation of course).

Have caught myself thinking a possible short today if that support @ 20 fails - then through 15.00 and there is a BIG gap begging to be filled ...?

As your FA indicates - stock has potential, but already dear and a risky play at this level (he says as buyers continue to step up to the plate <grin>)

Watching with interest.

Regards,

[Burnham]

Well fell through 15.00 with eyes wide shut ( hit 14.91 actually) and promptly reversed to rocket back to a close of 15.19.

Stock for the brave this one .......

[RichKid]

Well fell through 15.00 with eyes wide shut ( hit 14.91 actually) and promptly reversed to rocket back to a close of 15.19.

Stock for the brave this one .......

Yes, it's been jumping around a bit, just look at the course of sales for the last half hour. The depth is a bit tough to judge for big co's like this but as long as the current imbalance in market depth exists it is well clear of that gap up and for that reason I remain bullish.

[Burnham]

Congratulations - beautiful trade.

[RichKid]

Congratulations - beautiful trade.

Hi Burnham,
Thanks but it's still too early for me to relax, it's going ok so far, I won't be surprised if there is a pullback before long. The buy depth is building nicely though.

[RichKid]

Looking a bit better now but it really needs another higher high and higher low to keep the momentum going. Since the breakout it has been a very neat uptrend, checkout a line graph for the last two month to see the small valleys and peaks. I'm looking to raise my stop asap. Volume is not flash but no too low either.

Anyone know the fundamentals for this one? I've seen news reports about its attempts to expand overseas, I doubt the US is the only target.

[RichKid]

End of that uptrend for the last few weeks imo, seems to have lost momentum and now just going sideways, perhaps a consolidation, made a new high last week but couldn't keep going, just the small players working it up imo. Still holding in the higher part of the weekly range. Maybe just a breather.

[RichKid]

Okay, SHL defying me again but this time made a new high, not convincing though. I've asked for some help and input from tech as he knows more about these patterns than I do.

I will fill in the details of my entry. I wanted some exposure to a 'defensive' healthcare stock and picked SHL, I traded the breakout to new highs from an ascending triangle by placing an order just above $13 as I saw the steady uptrend, looked for a pullback to get in but just missed out (I got greedy, could easily have gone up a few cents when I saw the buy strength, lesson learnt).

Next thing I know it's gapped up on news of the US deal and reached the triangle target, the sell side had almost disappeared. So I thought I'd missed it and waited for a pullback, didn't happen so panicked and bought at $15.20, a bit nervous for a few days but it climbed above it again. My stop at $14 was just below the top of the gap, near the foot of what I thought was an impulse bar - RRR was a worry as I didn't have a reward target as the triangle target had been reached. Trailing stop now up to just below $15. I'm willing to give this a bit of space as trend is still up on all time frames, my concern is that it'll fall back to fill that gap but it seems safe so far.

Tech, do you find the stronger breakouts breakaway strongly immediately or do they consolidate for a bit like SHL?

Things I've learnt: depth is not the best guide in higher priced stocks but can be useful, many orders not in the depth. SHL is a steady mover, big jumps on news, volume not the most important factor with this stock. Recent div has helped my risk to reward calculation. SHL approaching full valuation according to analysts (but we know they are unreliable) but there are some overseas deals which may come off.

[RichKid]

Need I say it, stopped out. Will that gap be filled now? Unlikely but could well be.

[3 veiws of a secret]

Trading Halt! opens tuesday coming?

[ozambersand]

I am interested in people's views on this stock. Nothing has been posted on it for some time, although it is often one of the higher trading stocks (valuewise) on the ASX?

A London based Asset management company seems to buy and sell it in huge quantities. Not sure how much this is manipulating (affecting) the share price.

[Julia]

I bought this at $14.94 in January 2006. Sold it at a loss six months later.
It was a dog then, and as far as I'm concerned, it's a dog now.

[questionall_42]

I bought this at $14.94 in January 2006. Sold it at a loss six months later.
It was a dog then, and as far as I'm concerned, it's a dog now.

So why did you buy it in the first place Julia?

I bought into SHL at 12.05 in Aug 06. It trades on quite high multiples (even for pathology/health related stocks), but has got a great reputation for their management (which has historically commanded a premium). So, a big safe stock for my portfolio and I wanted more exposure to health as i was overweight in resources.

Having said that, I am looking to exit after another 4 months (my plan for SHL was to hold for a year); but if it traces back below $14, I am out.

[ozambersand]

It is interesting that in all the current talk of the takeover of Symbion, the main topic is that Healthscope would be the buyer along with private equity groups.

However, there is little talk of Sonic bidding. Is this because they wouldn't or because if it did happen they would reap some benefit without having to pay any money if the rumour at the end of this article is to be believed?


SYDNEY, May 7 (Reuters) - Pathology staff at Australian medical services firm Symbion Health Ltd. SYB.AX are considering a bid for the pathology business following a takeover offer for Symbion by Healthscope Ltd. (ASX: HSP.ax) , the Australian Financial Review reported on Monday.

The paper said some 100 of Symbion's 150 pathology staff, unhappy with current working conditions and expecting worse under Healthscope, have formed a group to discuss their options, and have held talks about a bid for the business with a private equity firm.

Earlier this month, hospital operator Healthscope, in partnership with private equity firms Ironbridge Capital and Archer Capital, offered A$2.78 billion ($2.3 billion) in cash and shares for Symbion.

If the offer succeeds, Healthscope would acquire Symbion's pathology, medical centres and diagnostic imaging businesses, while Ironbridge and Archer would acquire the pharmacy distribution and consumer arms, which account for around a third of Symbion earnings.

"There is a consideration that dealing with Healthscope is worse than Symbion," the paper quoted an unidentified spokesperson for the pathologists as saying.

The staff are also considering leaving Symbion, the paper said, a claim rejected by Symbion Chief Executive Robert Cooke.

The paper also quoted an undentified analyst as saying that rival pathology company Sonic Healthcare Ltd. (ASX: SHL.ax) could benefit by taking on the disaffected Symbion staff.

Thanks for those who answered my previous post, and commiserations if it is not performing well for you.

Perhaps one of the reasons that it has been a dog of late, is that its previous glamour was not really warranted and the figures were a little too good to be believed and sustained in the long term.

I gather they also are currently involved in a legal dispute with Healthscope over a failed takeover in New Zealand. They lost the first round but are expected to do better in the next. ;)

Or is the price being manipulated by large shareholders to intentionally low levels so that someone (private equity?) can buy them out. I am always very suspicious when former "good" companies share prices suddenly go into a decline for little good reason, giving possible take over buyers a nice cheap price to come in on.

(But then again, I am ashamed to admit that I am a conspiracy theorist from way back! :o !)

[questionall_42]

This is from the Infoarena weekly newsletter.

"SHL - Analysts at UBS upgraded Sonic Healthcare (SHL) to Buy this week on the expectation that the company will soon announce new pathology contracts in Europe. UBS believes Sonic recently secured preferred negotiator status in Germany for a EUR25m contract. In addition, at least five hospitals in the UK have started to outsource pathology services. Currently the shares are rated four times Buy, five times Neutral and one time Sell by the ten experts in the FNArena database."

[questionall_42]

European aquistion for SHL. Ann today (31 May).

SONIC HEALTHCARE ACQUIRES THE MEDICA LABORATORY GROUP
IN SWITZERLAND
Sonic Healthcare Limited (“Sonic”) (SHL.AX) is pleased to announce that it has acquired 100% of the Medica Laboratory Group (“Medica”) based in Zurich, Switzerland.
Medica has a well-established position in the Swiss laboratory market and is led by Dr Franz Kaeppeli, who has been the driving force of the group for the past 30 years and who will continue in his role as CEO. The Medica Group has annual revenue of approximately Swiss Francs (CHF) 55 million.
The unique strengths of the Medica Group include:
• A long tradition of providing personalised laboratory service.
• Service provision throughout most of Switzerland.
• A leading position in scientific endeavours (national and international
research projects and scientific publications).
The purchase price of the practice was ~CHF 98 million. The acquisition was debt funded and will be immediately earnings per share accretive.
Sonic Healthcare’s CEO and Managing Director Dr Colin Goldschmidt said: “The
acquisition of Medica represents an important addition to our expanding laboratory operations in Western Europe. Medica provides Sonic with an excellent base upon which to grow in the Swiss market and presents new opportunities for synergy capture within our evolving European federation of practices. Dr Kaeppeli and his experienced team of managers will continue to lead and operate the business into the future and we take this opportunity to warmly welcome all Medica staff to the Sonic team”.
Dr Kaeppeli, CEO of Medica said: “This alliance provides an opportunity for Medica scientists to expand their valuable research in the fields of laboratory diagnostics and applied sciences on a broader, global scale. We feel privileged to continue to provide our personalised laboratory service within a dynamic, internationally renowned group such as Sonic Healthcare and believe that this partnership will create new opportunities for our customers as well as for our staff.”

A private equity bid for SHL? Not impossible, but they still are trading at high(ish) PEs (22-23) and margins are getting smaller in the pathology services industry. I don't feel as if they are an ideal candidate for private equity.

[Julia]

So why did you buy it in the first place Julia?

I bought into SHL at 12.05 in Aug 06. It trades on quite high multiples (even for pathology/health related stocks), but has got a great reputation for their management (which has historically commanded a premium). So, a big safe stock for my portfolio and I wanted more exposure to health as i was overweight in resources.

Having said that, I am looking to exit after another 4 months (my plan for SHL was to hold for a year); but if it traces back below $14, I am out.

Partly for the reason you have quoted above - to balance up my p/f. I had nothing in healthcare and at the time - as far as I can remember - all the info I could find about SHL was positive.

Can't really remember now, but I think fairly soon after I purchased it there was some other company made an acquisition or were awarded a contract that SHL would have expected to get. Sorry to be so vague.

[Dutchy3]

For those looking to drop one into the super fund for a 10 - 20% over the next 6 - 12 months SHL is signaling at the close of this week.

Please note that this is a weekly chart

[nomore4s]

Anyone else on this?
Have a longer term view on this one atm. The trade has been going quite well to date and with the $14.20 spp for existing holders it has turned into a very good trade (can get lucky sometimes), but I will still be looking for any opp to pyramid.

Have attached 2 p&f charts (1 year & 4 years) showing a very good base for a substantial move higher.
Motorway if you see this and have the time, how would you place the counts on this? My counts put the target at over $20.00 but still am unsure if I fully understand how to make the counts and my software probaly isn't the best for p&f charts.

mmm the chart quaility isn't the best either.

[motorway]

You can make any P&F work

yes that software has limitations..

To have an effect
You need a sufficient cause..

the work in an active trading range
builds a special cause....A number of factors are at work..

Fundamentals unfolding becoming known to some one lead to
a technical position forming ( numerous factors at play )

weaker hands being replaced by stronger hands
( What produces markup )

identify

preliminary support ( first signs of demand absorbing supply )
last point of support ( accumulation completed )


You are not far off..

It is not time that moves the P&F sideways

All trading ranges are equal in time
but different in terms of congestion on P&F charts

If time does not do the work of making the chart move
What does ?

Supply and demand taking it in turns
is the only thing moving the chart

some pointers

the ultimate cause is earning power
But paradoxically the first evidence of what real earning power will be
is seen in the work of the P&F chart

which since it is not time
Must be something else..

The implication
is both a guide and performance measure

the chart moving sideways carries with it implication
A cause.. which until realized is only a potential..

How can a P&F chart possibly move sideways

active buying and selling
the one that gives out indicates
that the other was smart...

motorway

[Lachlan6]

SHL is looking great at the moment from a technical perspective. The break out to new highs signals the end of a two year accumulation pattern with a high probability initial target of $20.40. A very solid company fundamentally as well, I see much more upside in SHL.

[Pager]

Its a good stock to hold, the current share placement to share holders is a no brainer, will be taking mine up in full for another 350 shares at $14-20 its effectivly worth $1000 more than that based on the current price for that parcel of shares :)

Also noticed its been upgraded by many brokers with targets over $20 a share.

Only downside for me is i bought only 50&#37; of the parcel i was looking for and still havnt picked up the other half, the placement will help but think i may well have missed the boat, only upside is i bought at basicly this years lows.

[Bluebeard]

Im currently investigating health sector stocks, with Sonic Healthcare and Primary Health Care (PRY) being the two companys that I am looking at at the moment, I havent invested in the past in this sector, Ive been looking at the differences of the companys involved, if anyone has been a regular investor in this sector some clarity of information would be much appreciated.

[oldblue]

Hi Bluebeard.

If you're interested in health-related stocks you might care to have a look at Cellestis - CST.
A spin off many years ago from CSIRO they have developed a blood test for tuberculosis which is gradually gaining acceptance and taking over from the old skin test for the disease. Many advantages, too numerous to list here but good info on the website and in company announcements.
CST in the happy position of being profitable, growing cash balance, has no debt and sales have grown rapidly the last couple of years as acceptance of the various versions of their product increases. Havn't been profitable long enough to pay a dividend yet but this looks likely in next year or so as tax beomes payable.

Disc: I hold a few.

[Junior]

Increase in revenue, NPAT, div payout, EPS etc. and continued growth forecast for 2009...can anyone shed any light on why the SP is down 7%? Was the market expecting better results?

Potentially related to not securing the Auckland Pathology contract?

[gohawks]

Increase in revenue, NPAT, div payout, EPS etc. and continued growth forecast for 2009...can anyone shed any light on why the SP is down 7%? Was the market expecting better results?

Potentially related to not securing the Auckland Pathology contract?

No ideas here and down again today. I recently bought in so curious to hear other thoughts on the recent downturn against the market tide and after solid Half year reports as well! :confused:

[Junior]

Today's fall is explained by the stock going ex dividend. Paying 22 cents per share, 60% franked. I can't explain the rest plunge from $14. Maybe just playing catch up with the rest of the market.

[gohawks]

Today's fall is explained by the stock going ex dividend. Paying 22 cents per share, 60% franked. I can't explain the rest plunge from $14. Maybe just playing catch up with the rest of the market.


Excuse my ignorance but does that mean if i add to my current holdings today or tomorrow for example i wont receive any Dividend return on the shares purchased after the 5th for this current payout?

[nomore4s]

Excuse my ignorance but does that mean if i add to my current holdings today or tomorrow for example i wont receive any Dividend return on the shares purchased after the 5th for this current payout?

Yep certainly does, but seeing as the share price has dropped more than 22c you're actually in front;)

[Jikx]

There must be a reason! Certainly some sort of insider information is leaking out to the select few.. I'll make a punt and say that there will be some write down of assets.

Because it sure as hell isn't the earnings or cash flow.

[gfresh]

Further equity raising required? some overseas debt blown out? Expectation of a bad second-half? Major shareholder exiting? These are the only things I can think of at the moment. No doubt we'll find out well after the fact.

I was a firm believer in this stock being fairly stable over the large ups and downs of the last few months, but when it plunged in such a short period of time I wasn't too happy. Common sense said something negative must be happening behind the scenes, so got out :(

Falling 4.75% (presently) today is a lot more than the relatively small dividend!

A quick chart to illustrate current falls.

[marcadrian]

I went short SHL at $12.76 one week ago after it started to create new 30 day lows. Sorry guys, this one just continues to tank!

[Pager]

I think some of its contracts with the government for rebates and the like are up for renewal, obviously its not a good time for asking for an increase or maybe there are other players looking to get some of SHL,s business.

Does seem very strange the slide though, they were doing quite well and nothing so far from the company announcement wise :confused:

I just hope there is no bad news in the pipeline but if there is i just hope ASIC take a good look at trading in this company as it would stink of insider trading particualy if it turns out a few big players were getting out before anything is officially said as currently there is NOTHING.

[gfresh]

Although this is slightly old news now, update put out Friday, SHL loses $72M contract in Auckland to Healthscope. This will have some impact on future revenue, but does not fully explain the falls.

It looks more likely the explanation has been the shift out of the healthcare sector in the last 2 weeks (e.g. pull up charts of HSP, PRY, CSL), which is probably more likely to do with the slide in Sonic's share price.

[Mitsimonsta]

Sonic Healthcare (SHL) has announced the purchase of Hamburg-based Labor Lademannbogen, a laboratory business with 250 staff.

SHL has will pay €6.5 million ($11.6 million) cash upfront plus up to €4.5 million on a performance based earn-out 1 months after sale completion. Labor Lademannbogen is a €20 million per year revenue business.

The sale is conditional upon German competition regulator approval. SHL already owns Bioscientia, GLP Medical Group, Labor28 and the Schottdorf Group in Germany.

[gfresh]

Up a nice 8.59% on the back of today's profit results, and no wonder..

Revenue: $3014M - up 27%
NPAT: $315M - up 29% on last year
EPS: up 16% to 85.2cps

Pretty damn good for a recessionary environment. Healthcare always worth having in the portfolio somewhere, even if it's only a small percentage, often quite recession proof. Has outperformed (profit wise) most of the big names on the market this year.

[lukelee]

ths sp droped 20% from $12 to $10 in 21st May 2010 because of the annoucement:

"Sonic Healthcare Limited (“Sonic”) (SHL.AX) advises that largely due to an unexpected and temporary impact on
Australian pathology revenues, the company is likely to fall short of its guidance for the 2010 financial year."

but the profile and balance sheet still looks good.
I think $10 is a good price to enter the market for long term invest. what do you guys think?

[So_Cynical]

ths sp droped 20% from $12 to $10 in 21st May 2010.

I think $10 is a good price to enter the market for long term invest. what do you guys think?

Actually hit a low of 9.53 before coming back a little..Sonic is also now trading at a lower SP than in Mar 09 so its now at a (approx) 6 year low.

lukelee you do know how to search for threads? as i reckon its annoying for the MODs to have to move threads http://www.aussiestockforums.com/forums/showthread.php?t=1913