ScoPo’s Powerplays: Quality names continue to catch a bid as earnings roll in
Health & Biotech
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.
Healthcare (XHJ) finished the week up 2.23%, compared to the broader market which ended 2.20% lower.
Earnings was the story of the week, with some of the bigger names announcing their full year results.
Australia’s biggest healthcare company, CSL (ASX:CSL) didn’t disappoint as it delivered better than expected top/bottom line growth.
The company reported a full year net profit of US$2.375 billion, 13% higher than the previous year, and a final dividend of $US1.18 a share.
However, gross margins contracted on higher plasma costs.
CSL shares rose 3% during the week to close at $306.02, and Morgans has a price target of $324.45.
Another giant, Cochlear (ASX:COH), also posted results, announcing record sales of $1.4bn for the full year, with net profit increasing by 54% to $237 million.
The company also hiked its full-year dividend by 59% to $2.55 per share.
“The market continues to support some of the stronger names, and quality companies are starting to catch a bid at the expense of the smaller illiquid names,” Power told Stockhead.
Ebos Group (ASX:EBO) posted strong FY21 results in line with Morgans’ forecast.
The pharmaceutical distributor reported a 5% increase in full year revenue to $9.2 billion, which was the first time that the company has surpasssed the $9bn revenue mark.
Bottom line NPAT came in at $188.2 million, up 15.5% on the previous corresponding period (pcp).
During the year, EBO announced strategic acquisitions, a new pet goods manufacturing facility, and a medical device distributor.
“We have made modest upgrades to forecasts and moved our recommendation on EBO back to Add (from Hold), with around 10% in TSR (total shareholders return),” says Power.
Promedicus (ASX:PME), meanwhile, has also recorded another year of strong growth across all metrics, although it came in 7% lower than Morgans’ forecast.
The company reported a 19.5% jump in revenue to $67.9m and a 43% increase in EBIT to $42.7m.
“While the results were strong, we view the company as fully priced based on expected short-term earnings growth, and a normalisation of the marketing and promotional costs in FY22 and beyond,” Power said.
As such, Morgans has a Reduce recommendation on PME, with a price target of $54.59. PME closed the week at $65.85.
Telix Pharma (ASX:TLX)
Despite reporting a $33.4m loss for the half, Telix shares rose by 15% for the week after releasing details of studies which indicated that its TLX591 antibody-therapeutic platform could be significantly extended into other areas of prostate cancer treatment.
DXB shares fell by 23% for the week after last week announcing a $20 million capital raising to fund the company’s Phase 3 FSGS clinical program.
The company has granted Aptar Pharma the option to acquire the worldwide rights to Pharmaxis’ proprietary inhaler, Orbital, a device designed to deliver high payload dry powder to the lungs.
Chimeric Therapeutics (ASX:CHM)
Chimeric shares rose by 5% after announcing that it has received IND (investigational new drug) clearance from the US FDA for CHM 1101 (CLTX CAR-T). CHM 1101 is a CAR-T cell therapy that aims to treat patients with recurrent and progressive glioblastoma.
Some health stocks that will be announcing next week include:
Monash IVF (ASX:MVF) will report earnings.
Mach 7 Tech (ASX:M7T) will announce distribuition contracts.
Nanonsonics (ASX:NAN), will provide a pipeline update.
Impedimed (ASX:IPD) will give an update on its PreVent trial.
Virtus Health (ASX:VRT) will also be announcing results.
Power still likes the IVF theme, and his stocks for the coming week are IVF plays Virtus and Monash IVF.
“We expect strength in IVF cycles to continue into 2022,” Power said.
Due to lockdowns however, the key short term challenge facing the sector is, when will the pipeline return to more normal levels?
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.