Scott Power of Morgans discusses ASX health stocks for the week. Picture Getty Images
ScoPo’s Powerplays: As focus turns to Delta variant, these ASX health stocks are profiting from COVID-19 testing
Health & Biotech
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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.
Theme of the week
The Healthcare index (XHJ) is up 0.67% for the week at the time of writing, compared to the broader market which lifted by 1.23%.
The broader market has been a little wobbly recently after a strong eight-month run, with the focus now back on how much impact the Delta virus would have on the economy.
“Because of that, there’s been a lot of focus on the rapid COVID-19 tests, which resulted in big share price moves,” Power told Stockhead.
Power pointed to four stocks that have benefited from the demand for rapid test kits and swabs.
Atomo Diagnostics (ASX:AT1) has surged by 57% over the past week and 68% over the past month, since its COVID-19 rapid antibody and antigen tests were added by the TGA to the ARTG (Australian Register of Therapeutic Goods).
Around 50,000 antibody test units were sold in H2 FY21, with antigen test unit sales set to commence in Q4. The company also expects demand to step up very significantly in Q1 FY22.
Rhinomed (ASX:RNO) stock spiked 18% when the Victorian government ordered 1 million of RNO’s nasal swabs to support the State’s testing program.
IDT Australia (ASX:IDT) jumped more than 20% after announcing that it has formalised activities with the Australian Government to potentially assist with the production of a COVID-19 vaccine.
The company signed a Sterile Readiness Agreement with the government in August to bring IDT’s sterile manufacturing facility into a state of readiness to potentially produce the vaccine.
Genetic Signature (ASX:GSS) lifted by 8.5% during the week and 28% for the month, since reporting a 151% increase in revenue and a swing to net profitability of $1.75m.
The company designs and manufactures a suite of real-time Polymerase Chain Reaction (PCR) based products for the routine detection of infectious diseases under the EasyScreenTM brand.
“There’s not only a price hike, but the volume of trading on these shares are also up,” Power said.
Power’s notable health stock announcements this week
The company has enrolled its first healthy volunteers for the Phase 1 study of its 75mg cannabidiol (CBD) soft-gel product.
The study is designed to characterise the absorption profile of CBD from the CBD soft-gel product.
It will also support Avecho’s strategic focus of developing pharmaceutical CBD products that leverage its proprietary TPM (Targeted Penetration Matrix) formulations.
The oncology company announced the US FDA has accepted its Investigational New Drug Application to undertake a clinical study of the company’s investigational kidney cancer therapy, TLX250.
The primary endpoint of the trial is to determine the efficacy of combining immunotherapy with TLX250, versus the current standard of care alone.
The medtech company said that two abstracts were presented at the prestigious Heart Failure Society of America (HFSA) Annual Scientific Meeting held on September 10–13.
The abstracts demonstrated that bioimpedance spectroscopy offers an objective measure of heart failure stability during a viral pandemic, and has further shown the value of IPD’s SOZO digital platform.
“We maintain our speculative buy rating on IPD with a target price of 20.6c. We believe the near-term catalysts will likely drive the share price to our target price,” said Power.
IPD is trading at 12c at the time of writing.
ScoPo’s Powerplay
Power’s stock of the week is Micro-X (ASX:MX1).
Morgans has a speculative buy recommendation on the stock with a price target of 58c vs the current price of 29c.
Power said Morgans has compared MX1’s technology and commercial outcomes against US-based Nano-X Imaging (NASDAQ:NNOX), which operates in a similar space.
Both MX1 and NNOX have developed technology to miniaturise x-rays, which has applications not only in a hospital setting but also in security and military settings.
MX1 has also received a TGA approval for its Rover imaging machine, and is waiting for a European approval.
In terms of valuation, Morgans concludes that the market capitalisation for MX1 compared to NNOX highlights there is a significant disparity, and therefore an opportunity to buy MX1.
“We think MX1 is undervalued compared to its comparative company in the US, and that MX1 has a superior product,” said Power.
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 financial product advice contained in this article.
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