Reporting season preview: Healthcare

About the author:

Derek Jellinek
Author name:
By Derek Jellinek
Job title:
Senior Analyst
Date posted:
11 February 2019, 12:02 PM
Sectors Covered:
Healthcare

Setting the scene...macros/regulatory uncertainties are increasing

While it is good to see a bit of optimism creeping back into the market, with a broad rally to start the year, we believe there are increasing vulnerabilities to this type of sentiment-driven correction. These include:

  • slowing growth in China and Europe;
  • uncertainty around Brexit; and
  • China/US trade talks (with a 1 March deadline for further tariffs).

Locally, a looming Royal Commission into Aged Care and a federal election increase investor angst.

Sector performance solid long term, some headwinds near term

While sector performance has lagged the broader market over the past six months (-5% vs -3.7%) and aforementioned local issues have dampened upside over the past month (+2.3% vs +7.5%), the Healthcare sector has outperformed the broader market in eight of the last ten years and core industry growth drivers (growing/greying population, continued innovation, increased expenditures as a percentage of GDP) remain intact.

We believe the perceived safe haven of healthcare should emerge, once again, as a top sector as stocks struggle for direction into the new year, with our preference for offshore earners ResMed (RMD), Sonic Healthcare (SHL) and Volpara Health Technologies (VHT).

More information

Senior Morgans Analyst Scott Power and I discussed the Healthcare sector with the Morgans network ahead of reporting season (February 2019).

You can watch the presentation below:

 

Additional details regarding our reporting season hit and miss candidates are provided in the Reporting season preview research note (Morgans clients can login to view). Alternatively, please contact your Morgans adviser or nearest Morgans office for access.

Our Reporting Season calendar for February 2019 includes all the reporting dates and our company recommendations and comments.  

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

Disclosure of interest: Morgans may from time to time hold an interest in any security referred to in this report and may, as principal or agent, sell such interests. Morgans may previously have acted as manager or co-manager of a public offering of any such securities. Morgans affiliates may provide or have provided banking services or corporate finance to the companies referred to in the report. The knowledge of affiliates concerning such services may not be reflected in this report. Morgans advises that it may earn brokerage, commissions, fees or other benefits and advantages, direct or indirect, in connection with the making of a recommendation or a dealing by a client in these securities. Some or all of Morgans Authorised Representatives may be remunerated wholly or partly by way of commission.

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