• ASX health stocks fall 0.5% in past five days as RFK Jr appointed Secretary of US Department of Health and Human Services
  • CSL among global vaccination companies to fall following appointment of RFK Jr, a reported vaccine skeptic
  • Pathology and radiology giant Sonic Healthcare up after providing positive trading update at its AGM

 

Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 26 years, gives his take on the ASX health care sector for the week and his ‘Powerplay’ stock pick. 

 

Robert F Kennedy Junior – aka RFK Jr – may be the driving force behind MAHA (‘Make America healthy again’) but news of his appointment by President-elect Donald Trump to head the US Department of Health and Human Services (HHS) in his upcoming administration has ASX and global healthcare markets looking a little under the weather.

At 12.50pm (AEDT) on Friday the S&P/ASX 200 Health Care index (ASX:XHJ) was down 0.5% for the past five days, while the benchmark S&P/ASX 200 (ASX:XJO) was up 2.1% for the same period.

RFK Jr was a controversial pick and, among other things, has been critical of the US childhood immunisation schedule. MAHA is a movement targeting the reversal of the chronic disease epidemic as well as aiming to drive down healthcare costs.

As HHS secretary, RFK Jr would have oversight of both the US Food and Drug Administration (FDA) and Centers for Disease Control and Prevention (CDC).

“Considering the decision-making power the CDC and its Advisory Committee on Immunisation Practices have on immunisation schedules, RFK’s influence could pose tumultuous for vaccine recommendations and, subsequently, the financial performance of vaccine products,” Morgans healthcare analyst Derek Jellinek wrote in a note to clients.

He said the appointment of RFK Jr caused a sell-off in vaccine makers including:

  • Pfizer (NYSE:PFE)  down 7%
  • GSK (NYSE:GSK) down 7%
  • Sanofi (Nasdaq:SNY) down 5%
  • Merck & Co (NYSE:MRK) down 5%
  • Moderna (Nasdaq:MRNA) down 13%
  • Novavax (Nasdaq:NVAX) 6%
  • AstraZeneca (Nasdaq:AZN) down 3%

Australia’s biggest vaccine maker and healthcare name CSL (ASX:CSL) has also felt the fallout of RFK Jr’s appointment and is down ~2.2% in the past five days.

Jellinek said CSL’s Seqirus vaccine division generates ~$2 billion in sales, amounting to 14% of group sales,  and ~US$1.1bn of operating profit, amounting to 30% of group operating profit.

“Erasing more than $6bn off the market cap in less than two days appears overdone and a buying opportunity,” Jellinek wrote.

Power said vaccine stocks have really taken a bit of a hammering since RFK Jr’s appointment.

“I think we can assume it’s not all smoke and mirrors and there will be some policy changes but we just don’t know the extent of them and how it will flow through to these larger companies,” Power said.

Morgans maintains an add rating on CSL with a 12-month target price of $330.75.

 

 

Sonic up, Healius down

Pathology and radiology giant  Sonic Healthcare (ASX:SHL) is up 7% in the past five days after providing a positive trading update at its AGM. SHL reconfirmed guidance including EBITDA of $1.7 to $1.75bn, representing 5-10% growth.

Sonic’s FY24 net profit was lower than in FY24 due to an 87% reduction in Covid-19-related revenues.

“A significant reduction in Covid testing revenue was to be expected as the pandemic receded and vaccination rates increased,” chairman Professor Mark Compton told the AGM.

He said base-business revenue excluding Covid-related revenue was growing with contributions of targeted business acquisitions.

Sonic reported revenue growth of ~10% in the first four months of FY25. Power said post-pandemic headcount reduction programs to right size the company were nearing completion and inflationary pressures on labour and other costs appeared to be easing.

“Sonic has been quite weak for a couple of years now but they’ve got their cost base under control, the acquisitions they’ve made have been well integrated and generally volumes have been picking up,” Power said.

But while Sonic has risen this week, its local rival Healius (ASX:HLS) continues to come under pressure and is down 17% over the past five days.

“Healius has sold everything bar their pathology analytics business and have really struggled,” Power said.

At its recent AGM management provided a brief trading update but with no quantitative FY25 guidance, as expected. However, Healius is expected to  provide medium term financial targets and an update on the pathology business at its March 2025 investor day in March with CEO Paul Anderson telling the AGM that “high single digit EBIT margins are achievable”.

“While pathology volumes continue to improve, operating margins remain moribund on higher spend, ongoing labour headwinds and other inflationary pressures,” Jellinek wrote in a note to clients.

Morgans has a hold rating on Healius and has reduced its 12-month share price from $1.53 to $1.39. The broker has an add rating on Sonic and 12-month share price of $32.21.

 

 

Power’s Powerplay – EBR heads toward milestone FDA approval

Medtech EBR Systems (ASX:EBR) is Power’s pick of the week, with the company heading towards FDA approval for its WiSE CRT (cardiac resynchronisation therapy) system in Q1 CY25, which is a key milestone.

The company submitted the final module of its premarket approval (PMA) application for WiSE to FDA in August.  The PMA application for WiSE underwent an initial review by the regulatory body to confirm administrative completeness and adequacy of the technical elements before being accepted for a substantive review in September.

WiSE holds the distinction of being the world’s first leadless pacemaker for the heart’s left ventricle.

“We think approval is highly likely given the positive results from its clinical trial and the fact EBR has Breakthrough Therapy designation which allows for expedited review and interactive communication with the FDA,” Power said.

“The company is well funded following a $50m capital raise completed in October 2024, which will underpin the manufacture and commercial launch of the device.”

Morgans has a speculative buy and 12-month target price of $1.76 on EBR.

 

 

Research Corner – eat some nuts for healthy ageing

Regular consumption of nuts is associated with maintaining a healthy lifespan in older age, according to new research from a Monash University-led team.

Published in the Journal Age and Ageing, the study involved 9,916 adults aged over 70 years, who reported on their usual diet as part of the *ASPREE Longitudinal Study of Older Persons (ALSOP) sub-study.

Those who reported frequent consumption of nuts, including every day or several times a day, regardless of the type or form of nut, lived longer without dementia or persistent disability, compared to those who never or infrequently consumed nuts.

First author Holly Wild, a PhD candidate and lecturer from the Monash University School of Public Health and Preventive Medicine, said that nuts were a good source of protein, micronutrients, unsaturated fats, fibre and energy. She said whole nuts could be difficult to eat for those with poor oral health or chewing difficulties.

“Our study was able to account for poor oral health and other foods that people usually ate, and after adjusting for these and other factors, eating nuts remained positively associated with a healthy lifespan in later life,” Wild said.

“If you are wanting to incorporate more nuts into your diet, nuts are available in multiple different forms in supermarkets these days, including whole nuts, chopped or crushed nuts, nuts meals, and nut butters or pastes.

“However, we do recommend keeping salted nuts, and candied and chocolate covered nuts to a minimum.”

The current Australian Dietary Guidelines suggest that adults should be consuming 30 grams of nuts, which is equivalent to 1/3 of a cup or a small handful, or approximately two tablespoons of nut butter on most days of the week.

However, previous research has reported that Australian adults over 65 years only average between 4-4.6 grams per day.

“Choosing a mixture of nuts means you get the benefits of the varying amounts of nutrients found in different types of nuts,” Wild said.

 

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.

At Stockhead, we tell it like it is. While EBR Systems are Stockhead advertisers, the company did not sponsor this article.

Disclosure: The journalist held shares in CSL and Sonic Healthcare at the time of writing this article.

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