Ongoing inflationary pressure and currency headwinds have conspired to lower Sonic Healthcare's earnings, observes Morgans.

Management noted these hurdles are "delaying the completion of programs to align labour costs with current trading conditions".

As a result of these headwinds, FY24 earnings guidance is lowered to around $1.6bn from the lower end of the $1.7-1.8bn range.

The broker suggests preliminary FY25 earnings guidance of between $1.7-1.75bn is conservative, given evidence of waning inflation, ongoing cost-out and multiple earnings drivers.

The Add rating is maintained, but the target is reduced to $31.19 from $34.94 on the broker's lower FY24-26 forecasts.

Sector: Health Care Equipment & Services.

Target price is $31.19.Current Price is $25.01. Difference: $6.18 - (brackets indicate current price is over target). If SHL meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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