Sonic Healthcare Ltd (ASX: SHL) shares certainly had a day to forget on Thursday.
The ASX 200 healthcare stock crashed 13% to end the session at $25.05.
This was driven by a negative reaction to the release of its full year results for FY 2025.
While this is disappointing, one leading broker believes that the selloff could have created a buying opportunity for investors.
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What is the broker saying about this ASX 200 stock?
Bell Potter notes that Sonic Healthcare's operating profit (EBITDA) in FY 2025 was modestly short of expectations, which was punished by the market. It said:
Despite over 7% revenue and EBITDA growth, NPAT Post MI was relatively flat with a higher-than-expected tax rate reflecting the mix of earnings across jurisdictions. The EBITDA result was lower than BPe by c.1.4% and consensus by c.2.0%, which disappointed the market with a c.13% sell-off of the share price on the result.
Looking ahead, the broker was pleased to see the ASX 200 stock guiding to strong earnings growth in FY 2026. It adds:
EBITDA growth guidance of up c.17% and c.19% at the EPS line at current FX rates reflect in part the impact of the LADR acquisition, as well as the announced Cairo Diagnostics business. We have made minor adjustments to our estimates that mostly reflect higher interest cost estimates.
Major upside potential
According to the note, the broker has reaffirmed its buy rating on the ASX 200 stock with a trimmed price target of $33.30 (from $33.70).
Based on its current share price of $25.05, this implies potential upside of 33% for investors over the next 12 months.
To put this into context, a $10,000 investment would turn into approximately $13,300 if Bell Potter is on the money with its recommendation.
But the returns won't stop there. The broker believes that Sonic Healthcare will increase its dividend to $1.09 per share in FY 2025. This represents an attractive 4.4% dividend yield, which lifts the total potential return to over 37%.
Commenting on its buy recommendation, the broker said:
Investment View: BUY; TP Reduced 1.2% to $33.30 / sh. Changes to working capital and interest expense estimates drive a c.1.2% reduction in our blended valuation to $33.30/sh. Despite the market reaction, we think the share price offers material upside for investors that appreciate steady compound earners.
