ScoPo’s powerplays: Bullish on mobile X-ray company Micro-X

Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 24 years, explains what the movers and shakers have been doing in health and gives his ASX powerplays.

Themes of the week

Healthcare bounced back this week – finally! – with the sector enjoying its first winning week in nine weeks.

On Friday afternoon the healthcare index was up 3.5 per cent for the week, while the ASX200 was on track for just a 1.3 per cent gain.

A rebound by CSL (ASX:CSL) and strong quarterly figures by Fisher & Paykel Healthcare (ASX:FPH) helped bolster the life sciences companies this week. The latter was on track to finish the week up 10.8 per cent at $32.51 after announcing its revenue was up 73 per cent in the nine months to December 31.

The Kiwi company attributed the rise to an elevated demand for its respiratory devices from hospitals treating COVID-19 patients. Hospital products sales grew 113 per cent and hospital hardware revenue increased 446 per cent, compared to the same period in 2019 in constant currency terms.

Morgans sees Fisher & Paykel’s strong numbers as a plus for key competitor ResMed (ASX:RMD) which the stockbroker rates as a buy with a $30.99 price target. RMD shares were trading at $27.86 on Friday afternoon, up four per cent for the week.

Mach7 Tech (ASX:M7T) also delivered a solid update, with the medical imaging company announcing it had collected a record $4.25 million in cash receipts from customers in the second quarter.

“They’re continuing to add customers, with six new customers and 14 renewed or expanded deals with existing customers,” Power said.

M7T shares were trading at $1.3125 on Friday afternoon, up 10.7 per cent for the week. Morgans is maintaining its “add” recommendation on the Vermont-based company, with a $1.50 price target.

Ansell (ASX:ANN) shares were changing hands at $36.49 late Friday afternoon, up 5.6 per cent for the week, after the glovemaker said it would beat its first-half guidance thanks to pandemic-related “elevated demand” for its protective products.

Morgans has a hold rating on Ansell, which will report its first-half results on February 16.

Regis Healthcare (ASX:REG) suffered a midweek 8.1 per cent drop after investment house Washington H Soul Pattinson (ASX:SOL) dropped its non-binding, indicative offer of $1.85 a share to acquire the aged care operator after opposition from Regis’ board.

But REG shares had mostly bounced back by Friday afternoon, trading at $1.835, down 2.9 per cent for the week.

“One would surmise we haven’t seen the last of corporate activity in the aged care space,” Power said.

Morgans rates Regis a hold, with a $1.85 price target.

Meanwhile Medlab Clinical (ASX:MDC) gained after announcing its NanaBis drug candidate had been granted investigational new drug status by the US Food and Drug Administration.

That’ll allow the medical marijuana company to hold a US clinical trial to test the mixture of CBD and THC to treat cancer pain.

“It’s done really well for the week as well,” Power said.

On Friday MDC shares were trading at 33c, down 9.6 per cent for the day but still up 24.5 per cent for the week.

Shares in the sector’s newest entrant, Chimeric Therapeutics (ASX:CHM), were trading at 36c on Friday, following its ASX debut on Monday.

CHM shares, which were offered at 20c in a $35 million IPO, changed hands from 28c to 44c during the course of the week.

“It’s been a ripper,” Power said. “Paul Hopper (Chimeric’s founder), he’s had a lot of success in the biotechnology space.”

ScoPo’s powerplay

Power’s pick for the week is Micro-X (ASX:MX1), the Adelaide-based mobile X-ray company.

The company’s cold cathode X-ray technology reduces the weight of an X-ray machine from 500kg to 70kg, Power said.

As well as mobile X-ray devices for hospital bedsides and field hospitals, Micro-X is developing counter-IED scanner for the US military; a prototype airport self-service screening project; and a minaturised brain imaging stroke diagnosis device for ambulances.

“It’s homegrown Australian technology, products manufactured in Australia, selling to customers in Australia and around the world,” Power said.

This week Micro-X announced cash receipts of $1.6 million for the second quarter, with a net cash outflow of $2.5 million.

Mx1 shares were trading at 35.5c on Friday, down 4.1 per cent for the week, giving Micro-X a capitalisation of around $128 million.

Morgans rates the company as a speculative buy with a price target of 50c.

A key short term price catalyst is a decision on a grant application from the Australian Stroke Alliance, as well as more orders for its Nano and Rover mobile X-ray units

For next week, Power says he’ll be watching Impedimed (ASX:IPD), Swift Media (ASX:SW1) and Neuren Pharmaceuticals (ASX:NEU) for trading updates.

The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financialproduct advice contained in this article.