Buy, Hold, or Sell These 3 ASX Healthcare Shares

August 20, 2024
9:46 pm
Stock Piper Team

Healthcare stocks on the ASX are facing a challenging day, mirroring the broader market's downturn. The S&P/ASX Health Care Index has dropped by 1.53%, while the benchmark S&P/ASX is down 0.53%. As investors grapple with market volatility, we delve into the perspectives of experts on three key healthcare players: CSL, OncoSil Medical, and Sonic Healthcare.

Expert Verdicts on 3 Top ASX Healthcare Shares

1. CSL Ltd (ASX: CSL)

CSL Ltd. (ASX: CSL) remains the undisputed heavyweight of the ASX healthcare sector, boasting a market capitalisation of $138.67 billion. Despite a 1.94% decline today, the CSL share price is currently trading at $281.38, marking a 7.5% drop over the past year.

Jed Richards of Shaw and Partners has issued a buy rating on CSL shares. He highlights the company's robust long-term prospects, consistent dividend growth, and history of exceeding profit expectations. While recent margin pressures and the setback of the CSL112 drug trial have impacted the share price, Richards believes the current valuation presents an attractive entry point for investors.

Key Points to Consider:

Upcoming Financial Results: CSL is scheduled to unveil its 2024 Full financial results on August 13, 2024, offering investors crucial insights into the company's performance.
Sustainability Initiatives: The company has made strides in ESG initiatives, as outlined in its 2023 Sustainability Report.
Strategic Growth: CSL's focus on global expansion and product innovation remains central to its growth trajectory.

2. OncoSil Medical Ltd (ASX: OSL)

OncoSil Medical is an emerging player in the ASX healthcare sector with promising developments in pancreatic cancer treatment. As of today, OncoSil Medical Ltd. (ASX: OSL) is trading at AUD 0.010 per share. This indicates a positive performance for the day.

Recent updates from OncoSil Medical include significant advancements in their clinical trials and commercialisation efforts. The company reported its Appendix 4C cash flow for the quarter ended June 30, 2024 (Q4 FY24), with key highlights:

Revenue Growth: Q3 and Q4 revenue of $0.171 million.
Commercial Milestones: First commercial patients treated in Austria and Türkiye with the OncoSil device.
Financial Strength: $7.2 million in new equity raised or committed and a cash balance of $4.509 million at the end of the quarter.
Strategic Partnerships: A 3-year distribution agreement was signed for Saudi Arabia.

Analysts predict a speculative buy rating on OncoSil Medical shares. OncoSil Medical is a company with potential, particularly in the field of pancreatic cancer treatment. The recent financial and operational updates show promising growth and a steady path towards commercialisation. While it remains in its developmental stage, the progress in clinical trials and international market expansion suggests potential for steady growth, making it an attractive option for long-term investors seeking stability.

3. Sonic Healthcare Ltd (ASX: SHL)

As the fifth-largest healthcare company on the ASX, Sonic Healthcare commands a market capitalisation of $12.99 billion. Despite a 0.19% decline today, the company's share price stands at $26.99, representing a 24.4% drop over the past year.

Currency fluctuations and inflationary pressures characterise the challenging operating environment Sonic Healthcare is in. However, the company has demonstrated resilience through robust revenue growth, driven in part by strategic acquisitions such as SYNLAB Suisse, Dr. Risch, and PathologyWatch. A focus on cost reduction and operational efficiency is expected to bolster margins.

While the company secured a significant contract with the Hertfordshire & West Essex NHS, it will initially impact earnings before delivering long-term benefits. Sonic Healthcare is forecasting EBITDA of approximately A$1.6 billion for FY 2024 on revenues around A$8.9 billion.

Analyst Toby Grimm from Baker Young maintains a hold rating on Sonic Healthcare shares. He attributes the company's current valuation to the loss of COVID-19 windfall revenues and elevated operating costs. However, Grimm anticipates earnings growth in FY 2025 as the company's core business gains momentum.

Investing in ASX healthcare shares requires careful consideration of each company's financial health, market position, and growth potential. While CSL and Sonic Healthcare are established players with solid fundamentals, OncoSil Medical offers an intriguing speculative opportunity in the promising field of pancreatic cancer treatment. Investors should weigh the potential risks and rewards of each stock to make informed decisions.