Here’s why one top fund manager thinks there could be further upside for the Integral Diagnostics Ltd (ASX: IDX) share price

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The Integral Diagnostics Ltd (ASX:IDX) share price is running hot, jumping 32 per cent higher since May 21st.

Integral Diagnostics shares now trade at $3.11, up 120 per cent over the past 12 months.

Source: The Capital Club

Writing in their June letter to investors, Pie Funds revealed it holds the diagnostic imaging business in its dividend fund.

Integral Diagnostics announced the acquisition of four New Zealand clinics in late-May, followed by a further acquisition in Australia in early June.

In early June, Integral Diagnostics confirmed its guidance for FY18, saying it expected net profit after tax to grow 20 per cent from the $15 million reported in the previous year.

In February, the company rejected a $312 million bid from rival Capitol Health Ltd (ASX:CAJ). Since then, Integral Diagnostics has transformed from being a takeover target to making acquisitions.

Commenting on the New Zealand acquisitions, Pie says the transaction establishes a base for Integral in the New Zealand market from which it can grow. The acquired clinics are high-quality businesses which are very profitable.

“With a lot of “hot money” currently in the Australian market driving transaction multiples higher, we believe this transaction represents prudent capital allocation.”

With a market capitalisation of $444 million, Integral Diagnostics shares trade on a forward P/E of around 24.7 times earnings. The company trades on a fully franked dividend yield of 2.6 per cent.

Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at brucej@thecapitalclub.com.au