ScoPo’s Powerplays: Buying opportunities in a volatile week

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

Healthcare finished the week down by 5 per cent, compared to the broader market which fell by 1 per cent.

Overall it has been a volatile week for the market, with big up-days and big down-days not only in healthcare, but also in the broader index.

Tax-loss selling has also continued as we approach the 30 June deadline.

As noted in last week’s column, Power expects a big jump when the calendar flips over to 1 July.

“There’s still plenty of liquidity in the market. What usually happens around this period is fund managers look at their portfolios and move some of the under-performers out, and offset that against the profits that they’ve made,” Power told Stockhead.

“That’s traditionally what happens, and it’s what’s happening at the moment.”

Power believes this reshuffling is creating opportunities for investors.

He noted that big cap CSL (ASX:CSL) has fallen by over 7 per cent this week.

Telix (ASX:TLX) was also down by 12 per cent up until Thursday, but it had a big rise of 16 per cent on Friday on dip buying.

“Telix has had a big run, but they’ve had an announcement which was perceived to be negative by the market,” Power said.

That announcement refers to the clinical study of TLX250-CDx in bladder cancer released earlier this week.

Similarly, Starpharma (ASX:SPL) has dropped by almost 15 per cent, before dip buying caused the stock price to rebound and finished flat for the week.

The company has had an issue with the labelling of its anti-viral nasal spray Viralzee in the UK, with the regulator now questioning the references to SARS-CoV-2 and COVID-19.

Biggest gainers of the week

Actinogen (ASX:ACW) has whipsawed in the past fortnight, rebounding by 12 per cent this week after falling by 23 per cent the week before.

Over the past month however, the Actinogen share price has risen by more than 60 per cent.

The company had announced the progression of its clinical development program to treat patients with Alzheimer’s disease, as it prepares for the first part of the XanaMIA study.

For the month, immune-oncology play, Prescient Therapeutics (ASX:PTX), has almost doubled.

The company has announced the successful completion of the manufacturing of crucial components of the OmniCAR platform for its in-house programs of CAR-T therapies.

“I think it’s more of the big interest in the oncology space a the moment that’s attracting a lot of attention and driving the share prices,” Power said.

Stock downgrades

Power told Stockhead that Morgans has made a few changes in its share recommendations, as the company is moving to take some profits on stocks that have had a big run.

Morgans has now downgraded Pro Medicus (ASX:PME) to a “Reduce/Sell” recommendation.

“Basically Pro Medicus has run up past our valuations, and we felt it was too high,” Power said.

“So we’re taking profits, but it’s very much a short term call on the stock as the company has done particularly well in bringing its medical X-ray device into the hospital network.”

Morgans has also downgraded its recommendations on EBOS (ASX:EBO) from an “Add” to a “Hold”, as it also thinks the stock price has gone past fair valuations.

EBOS is currently the largest pharmaceutical supplier in Australia.

“EBOS is a very well-run company, but we’ve told our clients that we’re moving from an ‘Add’ to a ‘Hold’, and wait for an entry price closer to $30.”

EBOS is trading at $30.46 currently, having risen by more than 50 per cent in the past 12 months.

Gina Rinehart

Power pointed to an interesting capital raise this week by Little Green Pharma (ASX:LGP).

LGP is raising C$20 million (A$21.4 million) to acquire 100 per cent of Denmark-based medicinal cannabis producer, Canopy Growth.

“The interesting thing here is that Gina Rinehart has put $15 million into this European expansion,” Power explained.

“It’s interesting that someone who’s as astute an investor as Rinehart has identified medicinal cannabis as an area of interest,” he added.

The LGP share price has climbed by over 20 per cent this week.

Healthcare announcements you might have missed

Micro-X (ASX:MX1)

The X-ray tech specialist announced the first public showing of its Rover machine at the Arab Health 2021 medical equipment exhibition, where 50,000 healthcare delegates are expected to attend.

“After signing a distribution deal in the Middle East, we would expect other distribution agreements in Europe to come through as well,” Power said.

Suda Pharma (ASX:SUD)

Suda’s share price rose by 17 per cent this week, after announcing a $3.65 million capital raise to fund the initial development of its newly acquired iNKT cell therapy platform.

Acrux (ASX:ACR)

Acrux’s share price also rose by 17 per cent this week after announcing the FDA has signed off on its generic version of Jublia, a treatment for nail fungus delivered topically (via the skin).

Neuroscientific Biopharma (ASX:NSB)

The NSB share price rose by 10 per cent this week after announcing a partnership with Perth-based Linear Clinical Research, to conduct the first human trial for EmtinB.

EmtinB is a drug targeted at neurodegenerative conditions which affect the central nervous system such as Alzheimer’s and multiple sclerosis.

ScoPo’s Powerplay

Power’s stock of the week is Audeara (ASX:AUA).

Audeara floated back in May at 20c, but is currently languishing at 10c.

“It’s been disappointing for Morgans, however we still have a positive view of the stock, and we think the company is growing its sales nicely,” argued Power.

Audeara makes headphones designed to complement hearing aids, helping people with entertainment experiences.

“We believe that when they start posting their quarterly results, the share price will rise,” Power told Stockhead.

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.