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]

Re: SHL Sonic Healthcare

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]

Re: SHL Sonic Healthcare

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]

Re: SHL Sonic Healthcare

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]

Re: SHL Sonic Healthcare

Congratulations - beautiful trade.

 

[RichKid]

Re: SHL Sonic Healthcare

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]

Re: SHL Sonic Healthcare

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]

Re: SHL Sonic Healthcare

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]

Re: SHL Sonic Healthcare

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]

Re: SHL Sonic Healthcare

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! !)

 

[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.