Why the Sonic Healthcare (ASX:SHL) share price hit an all-time high today

The pathology provider’s share price is up amid growing demand for COVID-19 testing.

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The Sonic Healthcare Limited (ASX: SHL) share price hit a new record high today, extending its run in the green.

Sonic Healthcare shares are now exchanging hands for $39.65 apiece, just shy of the day high and all-time high $39.86. This represents a 1.43% rise on its previous closing price.

Let’s take a look at what’s driving the Sonic share price today.

But first – what is Sonic Healthcare?

Sonic is a global pathology provider with large market share in Australia, Europe and the United States.

The Sydney-based company also has a large footprint in diagnostic imaging in the Australian market.

Sonic Healthcare has been a solid performer on the ASX, seeing a share price increase of ~80% since January 2019.

What is behind today’s share price movement?

Investment banking giant Goldman Sachs thinks the COVID-19 testing market will continue to run hot in the near term.

Surging case numbers, fuelled by the new Delta variant of the virus, is driving COVID-19 test volumes, according to Goldman.

It believes Sonic is well positioned to benefit from these tailwinds, given “PCR testing volumes have increased significantly” in recent weeks.

In its report, Goldman Sachs said:

Given the materiality of COVID-19 testing for the ASX-listed pathology providers, [Sonic], HLS and ACL (GSe: 17-28% of FY21E revenues), our new PCR volume estimates drive +6-10% EBIT upgrades in FY21E and +9-47% in FY22E.

Investors seem to like the analysis on Sonic Healthcare shares, as trading volume surged higher than the 20-day average this morning, helping prop the share price northwards.

Sonic Healthcare share price snapshot

Sonic Healthcare shares have posted a year-to-date return of 23%. This extends the previous 12-month return to 26%.

The pathology provider is going from strength to strength, and has set five all-time highs since 30 June. The company has outpaced the S&P/ASX 200 Index (ASX: XJO)’s return of ~11% since 1 January.

Based on the current share price, Sonic Healthcare has a market capitalisation of around $19 billion.

Should you invest $1,000 in Sonic Healthcare right now?

Before you consider Sonic Healthcare, you'll want to hear this.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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