To say Monash IVF Ltd (ASX: MVF) had a challenging year last year might be a bit of an understatement.
The company, which helps people conceive via in vitro fertilisation, botched two embryo transplants, with one of those incidents resulting in a woman giving birth to a genetically unrelated baby.
Not surprisingly, the company's share price took a knock on that news, dropping from levels above $1, where it was trading until April, when the company admitted that a news report about one of the incidents at its Brisbane clinic was correct.
The company said in a statement at the time it had been aware of the incident since February, when it instigated an investigation which found human error was to blame.
Executive clean out
Monash IVF's then-managing director, Michaal Knaap, who had led the company since 2019, resigned in June, and the company also dropped out of the S&P/ASX 300 Index (ASX: XKO) at its September rebalance.
Chair Richard Davis, in the company's annual report released earlier this month, apologised for the incidents, and reassured shareholders that, while the company had halted dividend payments for FY25, it did aim to reinstate dividends "provided performance aligns with the FY26 underlying NPAT guidance we provided … on 22 August".
The result of all of this negative news flow has been a share price in the doldrums, with the shares changing hands for 71 cents on Monday, valuing the company at about $280 million.
Time to buy back in?
So where will the shares go from here?
The team at Macquarie believes that all the bad news is priced into the shares at current levels and currently has an outperform rating on Monash IVF.
As they said:
We believe recent incidents are already captured in the share price, with current valuation undemanding. We see medium-term upside on an improving macro environment, increased genetic testing, underlying structural demands, demographic and social changes.
The Macquarie analysts are factoring in a return to dividend payments, forecasting a dividend yield of 5.1% fully franked in the current financial year, rising to 5.4% next year.
Their price target for the shares is $1, and factoring in the dividends, the Macquarie team is expecting a total shareholder return over 12 months of 46.1%.
The analysts were also heartened by Medicare's September quarter update, which showed that total IVF cycles had increased by 1.2% compared with the same period last year.
Monash IVF will hold its annual general meeting on 20 November.
