ASX 200 Healthcare Index on a 10-day winning streak: 3 stocks to watch

Tue 29 Nov 22, 11:56am (AEST)
Health care FPH medical device
Source: Fisher & Paykel Healthcare

Key Points

  • The S&P/ASX 200 Healthcare Index has rallied back up to a near 3 month high.
  • CSL rallies back above $300 and receives FDA approval for now the world's most expensive drug
  • Fisher & Paykel 1H21 earnings were disappointing at face value but management remain positive on an improvement in near-term sales

The S&P/ASX 200 Healthcare Index opened higher on Tuesday, marking a tenth consecutive green session, up 3.3% since Wednesday, 16 November. The Index has rallied in a slowly but surely manner, with several sessions marking gains of around 0.3%.

This resurgence is in parallel with the recent outperformance of defensive and value oriented sectors like Staples and Industrials.

XHJ chart
ASX 200 Healthcare Index chart (Source: TradingView)

Let's take a look into three major ASX healthcare players, their technicals and broker views.

Fisher & Paykel

Fisher & Paykel (ASX: FPH) experienced a massive gap up on Tuesday, up 5.7% as the market opened. The gains extended to 12.1% at 11:00 am AEDT.

FPH posted a -23% decline in revenues for the first-half of FY23 to $690.6 million, cycling through significant covid-driven demand. Net profits fell -57% to $95.9 million as gross margins came in at 59.8% from 63.1% a year ago.

Still, management had plenty of positive forward-looking commentary, which might be the catalyst driving the positive price action on Tuesday.

“Through the first half, there are positive signs that our hospital customers are working through their excess inventory holdings, and total group sales of our hospital consumables have increased sequentially on a month-by-month basis since May," said Managing Director Lewis Gradon.

FPH shares spent around three months consolidating around the $16-18 mark, struggling to break through $18.40. It managed to push through on 21 November.

The half-year results has pushed the stock above its 200-day moving average for the first time since 10 January.

Fisher & Paykel share price chart
Fisher & Paykel share price chart (Source: TradingView)

Earlier this month, Morgan Stanley initiated coverage on FPH with an Overweight rating and a $21.00 target price.


CSL (ASX: CSL) has made a V-shaped recovery, up 13% from late October lows and rallying into the upper bound of its 3-month trading range.

The $300 mark has proven tricky to hold in the past, so will this time be any different?

CSL share price chart
CSL share price chart (Source: TradingView)

On 24 November, CSL received FDA approval for its hemophilia B gene therapy product, Hemgenix. It's not only the first gene therapy products approved for the rare disorder but also one of the world's most expensive drugs, priced at $3.5 million per dose.

The approval attracted notes from Morgan Stanley, Macquarie and Citi. All three brokers reaffirmed a Buy or Buy-equivalent rating with an average price target of $336.70.

Sonic Healthcare

Sonic Healthcare (ASX: SHL) is in an awkward spot after its earnings experienced a massive pull forward thanks to revenues derived from covid testing.

The trading update earlier this month flagged that covid testing revenues fell -64.8% to $280m for the four months to 31 October. This represents 10.3% of Group revenues, down from 25.7% from the prior period.

Still, Sonic Healthcare's base pathology business posted 6.7% revenue growth for the above period to $2.45bn.

But this was not enough to offset the absent covid-related earnings. At the Group level, revenue down -11.7% to $2.73bn and EBITDA fell an outsized -37.3% to $621m.

"The change in the level of COVID-19 related revenues between periods therefore has a disproportionate impact on EBITDA and margins," noted Sonic.

Sonic shares are down -31.4% year-to-date as it juggles a still-solid base business but deflating covid-related revenues.

SHL share price chart
Sonic Healthcare share price chart (Source: TradingView)

Following the AGM, Ord Minnett retained a Hold rating with a $34.00 target price.

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

Get the latest news and insights direct to your inbox

Subscribe free