Intelligent Investor

Virtus Health's share price falls

Virtus Health's recent price fall means it's time for an upgrade.
By · 8 Nov 2016
By ·
8 Nov 2016 · 2 min read
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Recommendation

Virtus Health Limited - VRT
Buy
below 7.00
Hold
up to 11.00
Sell
above 11.00
Buy Hold Sell Meter
BUY at $6.65
Current price
$8.10 at 16:35 (05 August 2022)

Price at review
$6.65 at (08 November 2016)

Max Portfolio Weighting
5%

Business Risk
Medium

Share Price Risk
Medium
All Prices are in AUD ($)

IVF provider Virtus Health's share price has fallen 19% since its positive full-year result released in August. We haven't seen any material news that would affect our valuation, though the company continues to face pricing pressure at its budget clinics, and ongoing Medicare reviews add a dose of regulatory risk. The stock now sports a price-earnings ratio of 15 and a free cash flow yield of 7% – not to mention a fully franked dividend yield of 4.5%. Virtus benefits from economies of scale, has plenty of free cash flow and decent growth prospects. Having brushed below our recommended Buy price, we're upgrading to BUY.

Note: The Intelligent Investor Growth and Equity Income portfolios own shares in Virtus Health. You can find out about investing directly in Intelligent Investor and InvestSMART portfolios by clicking here.

Disclosure: The author owns shares in Virtus Health.

IMPORTANT: Intelligent Investor is published by InvestSMART Financial Services Pty Limited AFSL 226435 (Licensee). Information is general financial product advice. You should consider your own personal objectives, financial situation and needs before making any investment decision and review the Product Disclosure Statement. InvestSMART Funds Management Limited (RE) is the responsible entity of various managed investment schemes and is a related party of the Licensee. The RE may own, buy or sell the shares suggested in this article simultaneous with, or following the release of this article. Any such transaction could affect the price of the share. All indications of performance returns are historical and cannot be relied upon as an indicator for future performance.
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