Sirtex slides on earnings miss

The liver treatment company's profit missed consensus forecasts and the share price fell in response, but its long-term prospects remain strong.

A lower than expected full year profit is weighing on Sirtex Medical’s (SRX) share price, but the dip is seen as a longer-term buying opportunity by some.

The liver cancer treatment company posted a 15.9% increase in revenue to $100.3 million and a 6.8% uplift in net profit to $18.3 million for the year ended June 30, 2013, compared with consensus forecast of $99.6 million and $20.1 million, respectively.

Sirtex also hasn’t declared a dividend, although that should not surprise as the company tends to only make an announcement on dividends in late September. The market is expecting the company to deliver a 10 cents a share payout.

Shareholders have elected to lock in some profit and sold the stock down 3.5% to $12.55 on the news, but that is not surprising given that Sirtex has rallied 62% over the past year, twice that of the S&P/ASX 300 Health Care Index, and is trading on a relatively high price-earnings of around 39 times based on the results.

However, the portfolio manager from Smallco Investment Manager, Rob Hopkins, told Eureka Report that Sirtex is a good pick for passive long-term investors.

The profit and revenue is tipped to continue to grow strongly in the years ahead, and if Sirtex can get approval for its product to be used early in the cancer treatment process (as opposed to current regulatory approval that only allows it to be used as a treatment of last resort), the stock could be strongly re-rated.

Sirtex is part of the Uncapped 100.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles