Bell Potter is bullish on these tech and healthcare stocks in 2025. Picture via Getty Images
Hot Money Monday: Bell Potter backs these tech and healthcare stocks for 2025
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- Bell Potter bullish on these tech and healthcare stocks
- Life360, Light & Wonder, and Gentrack in tech
- And PolyNovo and CSL among Bell Potter’s healthcare picks
As we look towards 2025, Australian stockbroking and financial advisory firm Bell Potter is optimistic about the prospects for both the technology and healthcare sectors.
With a strong pipeline of opportunities and an easing interest rate environment on the horizon, here’s a look at their top stock picks for the year ahead.
Bell Potter’s tech picks
In its latest report, Bell Potter said it sees a bright future for tech and gaming stocks, particularly as Australia is expected to ease interest rates next year.
“Lower interest rates are in general good for high growth stocks with low or negative cash flows/earnings now, and only reasonable or meaningful cash flows/earnings in several years’ time.”
Sounds logical – when money is cheaper to borrow, it tends to benefit the more speculative, high-growth stocks that need capital to fuel their expansion.
Interestingly, while the general narrative has been that rising interest rates have dampened the tech sector, Bell Potter notes that “tech stocks have still performed well over the past couple of years in a rising interest rate environment.”
This tells us that, in a way, the smaller, more nimble tech and gaming stocks might be poised for a nice boost once the rates start heading lower.
So, with the prospect of rate cuts in 2025, Bell Potter is placing its bets on a few mid-cap tech names:
When you think of “safety” you probably don’t think about an app, but that’s exactly what Life360 is offering.
The company runs a mobile app that provides a suite of safety features like driving safety, location sharing, and communication tools, all aimed at helping families stay connected.
With over 75 million users globally and around 7 million paying subscribers, the app already has a solid base.
However, there’s massive room to grow. Bell Potter highlights that “the penetration rate… is around 10%, and the company has a stated long-term target of 30%,” meaning Life360 has the potential to triple its paying users from here. That’s a massive growth opportunity.
And it’s not just about adding more subscribers. Life360 is diversifying its offering, tapping into new verticals like advertising, pet tracking and even elderly care.
Bell Potter believes the next catalysts for the stock are likely to come when Life360 releases its Q4/2024 results in February, which are expected to be “strong, towards the upper end of the guidance ranges.”
There’s also the potential for Life360 to be added to the S&P/ASX Top 100 in March, which could give the stock a nice little pop.
Buy; price target $26.75 – versus current price of $22.28
If you’re not familiar with Light & Wonder, it’s a leading cross-platform games company that develops slot machines, social casino games, and online gaming content.
Bell Potter sees solid growth ahead for the company, especially after it reduced its debt levels in 2022 and upped its R&D spending, which has led to better game performance.
The analysts expect “8-11% annual EBITDA growth rates over CY24-26,” driven by continued investment in R&D and market share gains in North America and online gaming.
But there’s more here than just growth.
Bell Potter sees the recent “turmoil surrounding the Dragon Train preliminary injunction as an attractive entry point.”
(LNW is facing litigation due to a legal dispute for this game with Aristocrat Leisure (ASX:ALL), its biggest rival in the gaming industry).
Bell Potter sees this as a buying opportunity when the stock has been hit by external events.
So, it’s not the kind of pick you would go for if you want a smooth ride, but it could pay off handsomely for those who can stomach a bit of volatility.
Buy; price target $180.00 – versus current price of $140.09
Gentrack might be a bit of a sleeper pick, but the analysts at Bell Potter are bullish on its prospects.
The company provides billing and CRM solutions to energy and water utilities, and it’s managed to position itself as an integral part of these utilities’ tech stacks.
The reason for this is simple: high switching costs. Once a utility company integrates Gentrack’s platform, they’re unlikely to make a move to a competitor.
Bell Potter believes demand for Gentrack’s services is growing, thanks to “an evolving energy grid… and “legacy tech debt incurred from historical underinvestment in the utility billing stack.”
The company’s track record of “upgrading and beating guidance” is another reason to get excited.
Sure, Gentrack is trading at lofty multiples right now—around 90x FY25e P/E—but Bell Potter sees the high valuation as justified by “high earnings leverage emerging”.
Buy; price target $13.90 – versus current price of $11.56
Bell Potter’s healthcare picks
Switching gears to healthcare, Bell Potter is watching the Australian biotech sector with a keen eye.
The analysts are excited about several key developments expected in 2025, with a slew of clinical trial readouts, product approvals and even potential mergers and acquisitions in the pipeline.
Polynovo is a leader in dermal replacement wound care in the US.
The company’s Novosorb technology has gained significant traction in the hospital sector, particularly for complex wound repair.
“FY25 revenues are likely to grow at >30% off a revenue base of $110m,” and the company is expected to be cash flow positive for the first time.
As if that wasn’t enough, Bell Potter says the company is also set to report data from its clinical trial on full-thickness burns, which could lead to an upgrade in product registration and improved pricing.
Buy; price target $3.00 – versus current price of $2.01
Clarity Pharmaceuticals (ASX:CU6)
Another healthcare pick of Bell Potter’s is Clarity, which is making rapid progress in the field of diagnostic imaging.
The company has been posting solid interim data from its clinical trials, particularly its prostate cancer imaging trial, Clarify.
With “64Cu SAR-bisPSMA… able to detect cancerous lesions in lymph nodes at a far earlier stage than the standard of care,” there’s significant potential for Clarity to revolutionise prostate cancer detection.
Bell Potter sees a flood of data coming in 2025, including “final data from Secure, the therapy trial also in prostate cancer,” which should further bolster the case for the drug.
Buy (Speculative); price target $10.00 – versus current price of $4.97
Finally, we can’t forget CSL, which remains a powerhouse in the global healthcare sector.
Bell Potter is confident in the company’s long-term prospects, expecting “annual double-digit earnings growth” over the mid-term.
Despite some near-term headwinds in its Seqirus and Vifor businesses, CSL’s core plasma business continues to perform well, particularly in immunoglobulin sales.
The analysts note that the company’s “multi-year gross margin recovery” is already underway, which should drive earnings expansion.
Trading at a forward PE below its 5- and 10-year averages, CSL still looks like a solid bet for those in search of steady growth.
Buy; price target $345.00 – versus current price of $278.79
The views, information, or opinions expressed in this article are solely those of Bell Potter and do not represent the views of Stockhead.
Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.
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