SHL has strengthened its German footprint with the purchase of two laboratories from Medical Laboratory Bremen for A$90 million.
The deal is EPS accretive in the first year with margin expansion & synergy gains achievable in the near term. We expect Sonic to deliver 7 – 9% EPS growth in FY17 and FY18.
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FY17 revenue $5.2b, on EBIT of $920m, Net Profit $$480m, EPS of $1.20 & DPS $0.78, places the stock on a forward yield of 3.6%.
We like Sonic as a core portfolio position, however the low yield and moderate EPS growth encourages the use of a covered call to enhance the cash flow and boost the overall investment return.
