Sonic Healthcare

Sonic 1H16 results were in line with our expectations, with solid underlying earnings growth driven by ex-Australia ops, somewhat overcoming well-flagged government policies that negatively impacted domestic businesses. Importantly, strong organic laboratory growth, profit enhancements across the domestic front, and gains from recent acquisitions and FX tailwinds, reiterate the outlook and strengthen our confidence in a solid 2H recovery and return to a more stable earnings growth profile. We increase our FY16-18 earnings estimate up to 2.4%, with our DCF/SOTPbased target price increasing to A$20.36 (prior A$19.92). We maintain our Add rating