Analysis of Sonic Healthcare: Share Price, DCF Valuation, Dividend Policy and Capital Structure

MANAGERIAL FINANCE
Managerial Finance
Analysis of Sonic Healthcare

2MANAGERIAL FINANCE
Table of Contents
Task 1. Analysis of share price of Sonic Healthcare.................................................................3
Task 2. Discounted Cash Flow Valuation of Sonic Healthcare.................................................4
Task 3. Dividend Policy of Sonic Healthcare............................................................................6
Task 4. Capital Structure of Sonic Healthcare...........................................................................7
References..................................................................................................................................8

3MANAGERIAL FINANCE
Task 1. Analysis of share price of Sonic Healthcare
The share price of Sony Healthcare remained highly volatile in 2018 amid market turbulence
(Sonic Healthcare, 2019). While the defensive nature of the stock with a low beta along with
a stable history of dividends keeps the stock attractive for most buyers, some investors think
that there are more attractive picks among the smaller peers delivering better returns. The
spike towards the end of the year has been majorly due to the Aurora acquisition deal
announcement by the company (LaFrenz, 2018). The company is expected to be the third
largest player in the US market post this deal finalisation. The proportion of revenue coming
from the US is expected to rise to 26% from the current 20% (Market Matters, 2018). Sonic
Healthcare considers this deal to reduce its dependence on Australian market amidst the
current volatility observed in the nation’s healthcare sector. The recent increase in share price
backed by higher trading volume strengthens the growing interest of the market towards the
company’s share.
Figure 1.
Source: Adapted from Sonic Healthcare, (2019)