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 has outperformed the market during the week, up 4.7% compared to the broader market which rose by 0.63%.

Power said the sector has bounced back globally following the rise in COVID-19 cases caused by the Delta variants.

“Healthcare is seen as more of a defensive sector in a volatile market, so this week we’ve seen a rotation back into this sector as the Delta variant spreads,” he told Stockhead.

Underpinning the positive sentiment this week was an earnings announcement by US-based Johnson & Johnson, which booked sales of US$23.3 billion for the year, a 27% increase over the previous year.

More than half of that revenue came from the sales of its single-shot vaccines.

In local stocks, Power pointed to CSL (ASX:CSL) and Virtus (ASXVRT), which rose by 5% each during the week.

For Virtus, Power said that Morgans currently has an “Add” recommendation, and has a 12-month price target of $7.04. VRT closed the week at $6.80.

According to its research note, catalysts for VRT’s growth include the continued rise in IVF cycle volumes across Australia.

Power also pointed to diagnostic imaging specialist, Mach7 (ASX:M7T), who reported 95% sales order growth for FY21 to $25.6 million during the week.

“We’re going to see 40% sales growth for Mach 7 over the next year,” Power said.

“Mach 7 remains one of Morgans’ best ideas in terms of our key stock picks.”

Significant healthcare announcements this week

Cogstate (ASX:CGS)

Brain health specialist Cogstate is up 15% this week, after reporting a 30% increase on pcp in its Q4 revenue to $10 million.

Cogstate also released an earnings guidance, saying that it expects to record a profit before tax in the range of $5.2 – $5.7 million.

“This is a company that’s benefiting from a lot of work that’s been done for Alzheimer’s disease,” Power said.

Actinogen (ASX:ACW)

Another Alzheimer’s focused company, Actinogen, rose by 5% during the week, after saying the two-part XanaMIA trial in mild cognitive impairment due to Alzheimer’s disease (AD) has commenced in patients with biomarker-confirmed AD.

Apart from AD, Actinogen is also working on studies in anxiety, and sleep and behavioural problems in Fragile X Syndrome (FXS).

Proteomics (ASX:PIQ)

The company rose by 10% on Thursday, following an announcement that it has engaged Nasdaq-listed global life science company, Abcam, to manufacture reagents for its PromarkerD predictive blood test.

The PromarkerD blood test is used for the early detection of kidney disease in patients with type 2 diabetes.

Key earnings reporting next week

Power said next week will be a busy week for earnings reporting in the health sector.

The key stock to watch for, he said, is Volpara Health (ASX:VHT), who will be reporting its Q1 FY22 results.

“The key thing that attracts me to Volpara is they’re building a very impressive technology stack around personalising breast diagnosis.”

“To give you a picture, there are about 40 million mammograms done in the US, and Volpara’s products are in some fashion used in 12 million of those images,” he added.

Other stocks to report earnings next week include Control Bionics (ASX:CBL) and Impedimed (ASX:IPD).

“We’re expecting to see good sales growth coming through for both of those companies,” Power said.

Another stock that should report good earnings next week, according to Power, is newly listed hearing tech company Audeara (ASX:AUA).

“Their quarterly results are expected to show that the business is gaining traction across the audiology clinics in Australia.”

Power said that Morgans will be looking for buying opportunities during the earnings season, and will be picking up good stocks on the dips.


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.