Integral Diagnostics, Capitol Health rise as Macquarie keeps outperform rating
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The news: Capitol Health shares continued to rally while Integral Diagnostics clawed back some losses from Monday following the proposed merger of the two companies while Macquarie analysts maintained their 'outperform' ratings.
The numbers: Integral shares were up 3.09% to $2.50 by afternoon trading, while Capitol lifted 8.3% to $0.29.
Macquarie analysts retained their 'outperform' rating on both Integral and Capitol, and kept their 12-month price targets at $2.65 and $0.32 for the respective stocks.
The analysts expect earnings per share accretion for the merged group of 12% in FY25 and 11% in FY26. This assumes $10 million in annual pre-tax net cost synergies from the merger, as identified by the companies, being achieved by two years post-completion.
The context: The analysts noted that on top of cost synergies identified by the two companies, they also anticipated revenue benefits from 17 additional fully licensed MRI machines from FY26 and better utilisation of radiologists across clinics.
Macquarie also expected Capitol to benefit from Integral's teleradiology business and its AI capabilities.
On Monday, Integral dropped 4.33% while Capitol Health soared 10.2% on the news of the proposed merger.
The source: Macquarie research
