Scott Power (actually Iain Wilkie): CSL’s fall haunts ASX healthcare, but Morgans sees opportunities

• ASX health sector drops 8.2% over past five days as heavy CSL fall weighs on market  
• Somnomed Q1 FY26 revenue up 13.5% on pcp to $28.7 million with full-year guidance  reconfirmed
• Epiminder targeting an ASX listing in December after a $125 million raise this week

Morgans healthcare and life sciences expert Scott Power is away this week so his colleague Iain Wilkie steps in to explain what the movers and shakers have been doing in health, and gives his ASX Powerplay.

The ASX healthcare sector has felt the fallout of the latest selloff in the sector’s largest stock CSL (ASX:CSL) this week after its shares tumbled more than 15% on Tuesday after management trimmed guidance at its AGM.

At lunchtime on Friday the ASX Health Care Index (ASX:XHJ) was down 8.2% for the past five days, while the benchmark S&P/ASX 200 (ASX:XJO) fell 1.6% across the same period.

“CSL’s latest fall earlier in the week certainly dragged the index lower,” Wilkie said.

CSL revenue growth in FY26 is now expected to be 2-3%, compared with the 4-5% guided to at release of the company’s FY25 full-year results. Net profit growth expectations have been trimmed to 4-7%, down from a forecast of 7-10%.

CSL management attributed the downgrade to weaker vaccine demand in the US and Chinese government cost containment affecting albumin demand.

The blood products giant has also shelved plans to spin off its vaccine division Seqirus into a separate ASX entity, which it flagged in its FY25 results.

Released on August 19, those results were met with CSL’s biggest ever daily fall of ~17% as investors reacted to announcement of the Seqirus demerger, a softer than expected FY26 outlook (now even softer) and cuts to its workforce of 15%.

CSL will hold a Capital Markets Day in the US from November 4–6, 2025, to provide further details on its strategy, which may be crucial to restoring investor confidence.

“Although it remains challenging to know when US influenza vaccination rates will stabilise, we believe the risk of a permanently lower base is being over-priced, with Seqirus and Vifor marked down, with even Behring trading below peers and well under its long-term average, which we see as unjustified,” Morgans’ Derek Jellinek wrote in a note to clients.

Vifor is the company’s iron deficiency and kidney care business with Behring focused on rare and serious diseases such as bleeding and immune disorders.

Morgans maintains a buy rating on CSL but has cut its 12-month target price to $249.51 from $293 per share.

Wilkie said he doesn’t believe CSL is fundamentally broken, adding that the stock’s ~37% year-to-date decline could present a buying opportunity –  though investors will need patience.

“CSL is the cornerstone of defensive growth as a portfolio holding,” he said.

“The Seqirus softness and China headwinds are weighing near term but CSL Vifor and CSL Behring are intact.”

Could Pro Medicus be a buy?

Down about 15% in the past month, Wilkie said it might be time for medical imaging software and services provider Pro Medicus (ASX:PME) to move back on the radar of investors.

“Ultimately, I rate Pro Medicus as the best company on the ASX, “Wilkie said.

“It’s just a matter of what price you pay for it.”

Morgans currently has a hold on Pro Medicus with a 12-month target price of $290 per share, but Wilkie said at ~$260 it’s back in the ballpark to begin considering accumulating positions.

“You wouldn’t back the truck up at $260 but you’d certainly have a look at it,” Wilkie said. 

“With these ultra-high valuation companies like Pro Medicus, momentum can continue for a while, so when they start to run in either direction, sometimes the best course of action is to wait and see where it settles. 

“A couple of months ago Pro Medicus went from $300 to $170 in the blink of an eye and then back up again.”

Somnomed provides positive quarterly update

Provider of oral appliance treatments for sleep-related breathing disorders and obstructive sleep apnea (OSA), Somnomed (ASX:SOM) delivered Q1 FY26 revenue of $28.7 million, up 13.5% on the previous corresponding period (7.0% in constant currency).

Growth was driven by strong performances in Europe and North America, which recorded revenue increases of 17.1% and 12.4% respectively, while APAC dipped 4.6%.

Somnomed said unit sales exceeded those of Q1 FY25 – a period boosted by the clearing of a prior-year backlog – highlighting continued growth momentum.

The company ended the quarter with a $16.5m cash balance and reaffirmed its FY26 guidance, targeting revenue of $119–$126m, EBITDA of $10–$12m, and capex of $6–$8m.

Somnomed also confirmed the Clayton Sleep Institute as the first US site for its Rest Assure clinical efficacy study, with a second major US clinic expected to be announced in the coming weeks.

Rest Assure is SomnoMed’s next-generation connected oral appliance that monitors sleep therapy to improve patient outcomes and clinician insights.

“It’s trying to bridge the gap with CPAP, which does have a lot of data, and they’re now running a pivotal trial,” Wilkie said.

“SomnoMed is already a global leader in the dental appliance market for sleep apnoea, and this will really set them apart if they secure FDA approval.”

Morgans has a speculative buy on Somnomed and 12-month target price of 99 cents per share.

“Their guidance is looking pretty comfortable at this point and hopefully the second quarter, which is one of the stronger quarters,  goes well and we’ll get a guidance upgrade in the February half year result,” Wilkie said.

Read Biocurious: Tag-team leadership helps sleep device maker Somnomed regain its bite

Epiminder prepares for ASX listing with Cochlear backing

Melbourne’s Epiminder, developer of a scalp implant to monitor drug-resistant epilepsy, is preparing to list on the ASX in December following a $125 million raise, which ran this week.

Hearing giant Cochlear (ASX:COH) is set to be the single largest shareholder in the Melbourne-based company with ~35% holding following the raise.

The Epiminder Minder system is an implantable, continuous EEG device designed to monitor brain activity in people with drug-resistant epilepsy.

Minder facilitates remote monitoring to aid the care of patients and regular clinical assessment.

“It’s an implant with some wires, which go around the skull under the skin connected to what looks exactly like a cochlear implant worn behind the ear,” Wilkie said.

FDA de novo approval was granted for the initial Minder device in 2025, along with breakthrough device designation.

“The second generation device is under development as the commercial product, which uses the cochlear system with Bluetooth connectivity and extra bells and whistles,” Wilkie said.

“It will still need to go through trials, however, rather than going through the full de novo process it will be a 510(k), which should expedite the process.

“They have first mover advantage in implantable EEG and it’s a big market.”

Other major shareholders include the Bionics Institute, St Vincent’s Hospital and the University of Melbourne.

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.

Corporate disclosure: Morgans Corporate Limited is a joint lead manager to the IPO for Epiminder and will receive fees in this regard.

Disclosure: The author held shares in CSL at the time of writing.