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
“Another sort of exciting week on the market,” says Scott Power. “Continuing that swing into some of those key names, that pushed the index up during the week.”
The healthcare index was the best-performing sector this week, rising 5.1 per cent in its best performance since August. The All Ordinaries gained just 1.5 per cent.
It was third straight week of gains for the healthcare index, which had previously dropped for four weeks straight and 13 of the past 15 weeks.
Big names like CSL (ASX:CSL), Sonic Healthcare (ASX:SHL) and Cochlear (ASX:COH) have been major contributors, Power said. They were up 5.3, 9.7 and 4.7 per cent this week, respectively.
Moderation in the rise of bond yields and economies opening up in Europe has helped sentiment, Power said.
IDT Australia (ASX:IDT) was the biggest gainer this week, climbing 45.6 per cent to 41.5c after announcing last Friday that Australia’s Department of Health had asked it to assess the feasibility of using its sterile manufacturing facility to supplement the production of a COVID-19 vaccine.
Its shares are up 124 per cent since that announcement.
“That’s very, very interesting for them,” Power said.
Immutep (ASX:IMM) rose 26 per cent to 46c after a Bristol Myers Squibb study showed a drug similar to Immutep’s efti worked to fight cancer in patients with advanced melanoma.
Race Oncology (ASX:RAC) gained 1.5 per cent this week to $3.99 after beginning a pre-clinical research program evaluating the use of its lead drug candidate, Bisantrene, as a treatment for clear cell renal cell carcinoma (ccRCC), a form of kidney cancer.
Race last week announced it was also conducting studies using Bisantrene to treat melanoma.
Chimeric Therapeutics (ASX:CHM) fell 8.1 per cent this week to 28.5c – a low since it made its debut on the ASX in January – despite the CAR-T player successfully dosing the first four patients in its 18 to 36-patient glioblastoma trial.
Capital raisings continued this week, with Adherium (ASX:ADR) raising $18 million and Medlab Clinical (ASX:MDC).
“There’s still an appetite for it, but albeit not as the same level” as last year, Power said.
ScoPo’s powerplay
Power’s pick for last week was Mach7 Technologies (ASX:M7T), an enterprise imaging company whose shares had been languishing of late.
But after his call, they gained 8.8 per cent this week to finish at $1.30.
“That’s worked really well for us,” Power said. “That one can go higher.”
Morgans’ price target for Mach7 is $1.68.
This week Power’s pick is Brisbane bio-impedance device manufacturer Impedimed (ASX:IPD), which finished the week flat at 11.5c.
“They are doing some very interesting work in the early detection of lymphoedema, and what we’re seen on a quarterly basis is that annual recurring revenue is increasing,” Power said.
There are a number of other catalysts for the company, Power said.
The company is working to bring forward evidence showing its technology can work to identify patients at risk of lymphoedema (limb swelling), as well as heart failure patients in danger of readmission.
It’s also very well funded, Power said. Shareholders that participated in an April 2020 entitlement offer have options expiring at the end of the month that are “well in the money”. (The strike price is 3.75c).
Morgans rates Impedimed a “speculative buy” with a price target of 20c.
Overall, Power said, the market is looking “very buoyant”.
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