Why is the Virtus Health (ASX:VRT) share price slipping today?

It seems the experts are split about which direction Virtus shares will go next.

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Key points

  • Virtus Health share price edges 1.46% lower to $8.10
  • The company's shares are trading ex-dividend today
  • Eligible shareholders will receive a payment of 12 cents per share on 14 April

The Virtus Health Ltd (ASX: VRT) share price is hovering in negative territory in early afternoon trade on Wednesday. This is despite the All Ordinaries Index (ASX: XAO) shooting higher today by 0.45% to 7,655 points.

At the time of writing, the fertility treatment company’s shares are down 1.46% to $8.10.

Why are Virtus Health shares falling today?

Following the company’s disappointing first-half result, investors are selling Virtus Health shares as they go ex-dividend today.

This means that investors who bought the company’s shares on or before Tuesday will be eligible for the upcoming dividend. Anyone who purchases the shares today will miss out as the seller has secured the dividend.

Historically, when a company reaches its ex-dividend day, its shares tend to fall in proportion to the dividend paid out.

When can shareholders expect payment?

For those eligible for Virtus Health’s interim dividend, shareholders will receive a payment of 12 cents per share on 14 April. The dividend is fully franked which means that investors will receive tax credits to put towards their tax bill.

The board maintained its latest dividend at 12 cents a share, representing a payout ratio of approximately 65%.

Management did note that the target forward dividend payout ratio will be based on a full-year dividend range of 45% to 55%. This is to “enhance balance sheet flexibility for investment in organic and inorganic growth initiatives.”

On an annualised basis, Virtus Health has a trailing dividend yield of 2.96%.

Are Virtus Health shares a buy now?

Following the company’s H1 FY22 results, a couple of brokers weighed in on the Virtus Health share price.

The team at Macquarie raised its 12-month price target by 3.5% to $7.35 apiece. Based on the current share price, this implies a potential downside of nearly 10% according to the broker.

On the other hand, Morgans lifted its rating on Virtus Health shares by 8.6% to $8.25. It appears its analysts are currently in line with what they believe the company to be priced at.

Virtus Health share price summary

Over the past 12 months, the Virtus Health share price has surged by 37%. It’s worth noting that these gains have come from the back end of 2021 to as late as last week.

The company’s shares reached a multi-year high of $8.33 on 14 March, before backtracking slightly.

Based on valuation grounds, Virtus Health commands a market capitalisation of roughly $692.8 million.

Motley Fool contributor Aaron Teboneras has no position 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 Macquarie Group 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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