Sonic Healthcare Ltd | Asia Pacific Organic growth remains modest

Research evidence excerpt

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M

Idea

August 20, 2026 02:12 PM GMT

Morgan Stanley Australia Limited+

Sonic Healthcare Ltd | Asia Pacific

David L Bailey

Equity Analyst

Organic growth remains modest

Peter Niu

Research Associate

What’s Changed

Sonic Healthcare Ltd (SHL.AX)

From

To

Price Target

A$20.60

A$20.30

SHL recorded modest organic constant currency NPAT growth in

FY26, with fee cuts a risk to growth over the coming years.

Sonic Healthcare Ltd (SHL.AX, SHL AU)

Australia Healthcare | Australia

Key Takeaways

FY26 NPAT was -1% vs VA consensus (+5% vs MS), but with guidance implying

weaker than expected growth for FY27 (MS FY27 NPAT growth of -3%).

Excluding the LADR acquisition and FX movements, underlying NPAT increased

by 3.7% in FY26.

With forecasts implying modest EPS growth to FY29 and potential for fee cuts in

the US and Germany, we see greater appeal elsewhere in the sector. Stay UW.

What was interesting: (1) SHL recorded underlying NPAT growth of 17.0% and

14.8% in constant currency (CC). Excluding the NPAT contribution from LADR in

FY26 (A$59mn) implies organic growth of 3.7% (CC). (2) SHL indicated fee cuts in

Switzerland from 1 Jul-26 are expected to reduce revenue growth by ~3% or ~A

$35mn (captured within our forecasts). In the US, PAMA fee reductions scheduled

for 1 Jan-27 (a potential impact of ~A$15mn in FY27, or ~A$30mn on an annualised

basis) remain uncertain and are not captured within guidance. In Germany, SHL

views the proposed reform of the GOA schedule (~1/3 of German revenue) as

Stock Rating

Industry View

Price target

Up/downside to price target (%)

Shr price, close (Aug 20, 2026)

Mkt cap, curr (mn)

Avg daily trading value (mn)

Underweight

In-Line

A$20.30

(5)

A$21.38

A$10,592

A$37

Fiscal Year Ending

06/26 06/27e 06/28e 06/29e

EPS (A$)**

Prior EPS (A$)**

EPS (A$)§

EBITDA (A$ mn)

ModelWare net inc (A$

mn)

P/E

ROE (%)

EV/EBITDA

Div yld (%)

FCF yld ratio (%)

1.26

1.19

1.21

1,933

621

1.23

1.26

1.29

1,940

603

1.29

1.32

1.41

2,027

635

1.36

1.37

1.58

2,114

665

16.6

7.5

8.1

5.2

6.1

17.4

7.2

8.4

5.1

8.0

16.5

7.6

8.1

5.1

8.9

15.8

7.9

7.8

5.3

9.3

…