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Health & Biotech
Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 27 years, gives his take on the ASX healthcare sector for the week and his ‘Powerplay’ stock pick.
Morgans’ Scott Power said it had been a volatile week for Australian and global equity markets, driven largely by US President Donald Trump’s proposed tariffs on imports from key trading partners.
Trump signed off on major tariffs on February 1 with Canada and Mexico facing 25% on non-energy imports and China 10% on a broad range of goods, before being granted a 30-day reprieve. He also said new tariffs on the European Union would “definitely happen” because “they’ve really taken advantage of us”.
“It’s hard to know where it’s all going to land,” Power said.
Medical device maker Fisher & Paykel Healthcare (ASX:FPH) said its earning could be impacted by Trump’s proposed tariffs on Mexico.
The company said it made about 45% of its products in Mexico, with the remainder made in New Zealand.
About 60% of the Mexican output is supplied to the US and these products would be hit if a 25% tariff were to go ahead.
“Management indicated US tariffs would delay obtaining its targeted 65% GPM by 2-3 years,” Power said.
He said as we come into H1 FY25 reporting season we may hear more from companies on the impacts of proposed US tariffs on their business.
“They’ll no doubt have to start quantifying if there’s a positive or negative impact.”
At 1.45pm (AEDT) the S&P/ASX 200 Health Care index (ASX:XHJ) was down 2.7% for the past five days, while the benchmark S&P/ASX 200 (ASX:XJO) rose 0.3% for the same period.
H1 FY25 reporting season will kick off next week with large caps in the healthcare sector CSL (ASX:CSL), Ansell (ASX:ANN),ProMedicus (ASX:PME) and Cochlear (ASX:COH).
Power said that brokers at Morgans were often asked whether they expect a result to be positive, neutral, or negative.
He said most of the time, they lean to neutral, as many results are pre-guided – especially for smaller companies that have released quarterly updates.
“But we go in saying neutral and every time there is always so much volatility,” he said.
Power said there’s always something a company will report that is unexpected and it can be positive or negative.
“I think on balance this reporting season across the larger ones should be positive and what I have noted across the quarterly results, so the smaller end of the market, the majority has had neutral reactions,” he said.
“They’ve come out with quarterly reports and not much has happened to the share price.”
ImpediMed (ASX:IPD) has reported its Q2 FY25 results, which Power said demonstrated solid sales growth and showed the cost base was under control.
However, he said the US install base for its Sozo device was disappointingly below what Morgans was expecting, although the pipeline of opportunities suggest subsequent quarters should see a meaningful step up in sales.
Power said Zozo was the only US FDA-cleared, clinically validated bioimpedance spectroscopy (BIS) device for early detection and prevention of lymphoedema.
ImpediMed reported record revenue of $3.3 million, up from $2.7m in Q1 FY25 and in line with net operating cash outflows of $2.5m for the quarter versus $4.8m in line with expectations.
“The install base in the US at 20 units was below what we were expecting but do expect it will improve over the coming quarters,” Power noted.
ImpediMed also announced this week its wholly owned subsidiary, ImpediMed, Inc. had executed an agreement for a five-year US$15m growth capital facility with SWK Funding LLC, a specialist finance company with a specific global healthcare sector focus.
“That takes the funding question off the table with their existing cash balance of around $17 million,” Power said.
Morgans maintains a speculative buy rating on ImpediMed but has reduced its 12-month target price from 19 to 17 cents.
Blood-products giant CSL is Power’s pick of the week, which he said was probably of most interest to investors in the upcoming half yearly reporting season.
“The CSL share price has been flatlining for a couple of years now so the question a lot of investors are asking is what needs to happen to get that share price moving again?” Power said.
Morgans healthcare analyst Derek Jellinek expects H1 FY 25 results to be in line with consensus and the company to reiterate their full-year guidance which currently sits at NPAT of between 10-13% and revenue growth of 5-7%.
“If they upgrade that expectation then that will obviously be positive and maintaining that guidance will be seen as positive but we don’t want to see them pulling back on that guidance at all,” Power said.
Power said most analysts have targets of above $300 for CSL, which hit its price peak of $342.75 in February 2020, prior to the Covid-19 pandemic.
Morgans has an add rating on CSL and 12-month target price of $330.75.
Do you regularly eat eggs? Regular consumption of eggs is associated with a 29% lower risk of cardiovascular disease-related death in relatively healthy older adults, according to new research from a Monash University-led team.
Published in the journal Nutrients, the researchers found that for relatively healthy older adults, consuming eggs 1-6 times per week was associated with a lower risk of all-cause mortality (death from any cause) and CVD mortality compared to those who rarely or never eat eggs.
The study involved 8,756 adults aged 70 years or older, who self-reported the frequency of their total egg intake.
First author Holly Wild, a PhD candidate and lecturer from the Monash University School of Public Health and Preventive Medicine, said compared to older adults who never or infrequently ate eggs (up to to twice a month), those who ate eggs 1-6 times a week had a 15% lower risk of death from any cause, and a 29% lower risk of cardiovascular disease-related death.
“Eggs are a nutrient-dense food, they are a rich source of protein and a good source of essential nutrients, such as B vitamins, folate, unsaturated fatty acids, fat-soluble vitamins (E, D, A, and K), choline, and numerous minerals and trace elements,” Wild said.
“Eggs are also an accessible source of protein and nutrition in older adults, with research suggesting that they are the preferred source of protein for older adults who might be experiencing age-related physical and sensory decline.”
The study also explored the relationship between egg consumption and mortality across different levels of diet quality (low, moderate, high). It found adults with a moderate to high diet quality reported a 33% and 44% lower risk of CVD-related death, suggesting that the addition of eggs to moderate and high-quality diets may improve longevity.
The study also explored the impact of egg consumption on individuals with dyslipidemia (high cholesterol), linking higher egg intake to increased mortality risk in people with dyslipidemia.
However, the findings showed a 27% lower risk of cardiovascular-related death among participants with dyslipidemia who ate eggs weekly compared to those who rarely or never ate eggs.
The current Australian Dietary Guidelines and the American Heart Association (AHA) recommend that adults with normal cholesterol can eat up to seven eggs per week, while some European countries suggest limiting it to 3-4 eggs per week. The AHA also supports up to two eggs per day for older adults with normal cholesterol.
The researchers said the findings may aid development of evidence-based dietary guidelines for egg consumption for older adults.
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.
Disclosure: The journalist held shares in CSL at the time of writing this article.
Health & Biotech
Health & Biotech
Health & Biotech
