ASX 200 healthcare stocks had a spectacular bull run at the onset of the COVID-19 pandemic. Most healthcare stocks appreciated significantly in the last two years. However, the bull run for healthcare stocks is not over. The pandemic showed the under-preparedness of the healthcare sectors of most countries to deal with a healthcare crisis of such a scale. Therefore, we expect a significant increase in healthcare spending, which will continue to benefit healthcare and pharma companies.
Healthcare is an important defensive sector along with utilities and consumer goods. Investing a portion of total investible funds in defensive sector like healthcare is a good hedge against inflation. Also, defensive sector investment can lower the overall risk of the portfolio. An ideal portfolio, therefore, should include both growth as well as defensive sectors in the right mix. Healthcare is probably the most important defensive sector as healthcare spending is not affected much even if there is an economic downturn.
The healthcare sector as a whole is going through a re-rating which reflects its long-term potential. According to estimations, earnings of the ASX 200 healthcare companies are expected to grow by 14% annually in the next few years. With expected economic recoveries and higher healthcare spending across the world, we remain bullish on the healthcare sector.
Here are our top five ASX 200 healthcare stocks for 2023.
1. CSL Limited (ASX: CSL)
About the company
Commonwealth Serum Laboratories (CSL) is a leading healthcare company in Australia. It has a wide portfolio of businesses serving all healthcare verticals. CSL Behring is a global leader in dealing with rare and serious diseases. CSL Seqirus is a major influenza vaccine supplier in the world. CSL Plasma is the world's largest plasma collection company. The most recent division CSL Vifor deals with iron deficiency and nephrology. The company has a current market capitalization of $142.13 billion.
Stock Information
The previous closing price of the stock was $293.7. It is currently trading at a PE ratio of 41.24. Its current earnings per share are $5.08. The stock is currently trading at an attractive valuation as it has corrected by 5.33% in the last 1 year. However, the stock has outperformed the entire pharma sector by 5.63% in the same period. This reflects the relative attractiveness of the stock compared to its peers.
The company posted a full-year profit of $2.25 billion, which was in line with Bloomberg estimates of US$2.26bn and better than Morgan Stanley’s forecasts of US$2.18bn. The company anticipates strong growth in plasma collections and plasma therapies. The guidance for net profit after tax in FY23 is US$2.4 billion to US$2.5 billion, which means a growth of around 6.5% to 11%.
2. Mayne Pharma (ASX: MYX)
About the company
Mayne is an ASX-listed specialty pharma company that commercializes branded and generic drugs. In the last 40 years, the company has developed new oral drug delivery systems and commercialized numerous products around the world.
The primary business of Mayne is developing and manufacturing proprietary and generic pharmaceuticals. It has two main development and manufacturing centers based in Salisbury, Australia, and Greenville, North Carolina, US. Mayne specializes in various complex oral dosage forms such as potent compounds, modified-release products, and poorly soluble compounds.
The company has a current market cap of $469,750,187
Stock Information
The previous closing price of the stock was $0.27. The stock has corrected significantly in the last 1 year. It is currently trading at 15.6% lower as compared to 1 year before. This makes the current valuation of the stock very attractive for long-term investors.
The company reported revenues of $424.8m, up 6% from FY21. It also reported a 40% increase in its branded products revenue. The company is expected to get a substantial amount of cash injection after agreeing to sell its Metrics Contract Services business to Catalent for US$475 million.
3. Clinuvel Pharmaceuticals (ASX: CUV)
Clinuvel is an ASX-listed global pharmaceutical company that develops and commercializes treatments for various systematic, metabolic, genetic, and acute disorders. In addition, it develops various healthcare solutions for the general population.
The primary product of Clinuvel is SCENESSE which is used in the treatment of a range of skin disorders.
The current market capitalization of the company is $950,654,903.
Stock Information
The last closing price of the stock was $19.24. The current earnings per share are $0.471. The stock is trading at a very attractive valuation as it has corrected around 52.79% in the last 1 year. However, buying momentum is building up as the stock has recovered 10.83% in the last 1 week.
In the last financial reports, the firm reported revenue of $67 million (up 38%) and a profit of $21 million (up 15.6%). The company is experiencing a major pick in its commercial operations and demands. The company is pursuing several R&D projects which would add future value to the stock. Overall, Clinuvel is a strong investment-grade stock.
4. Neuren (ASX: NEU)
Neuren is an ASX-listed biopharmaceutical company that focuses mainly on neurological disorders, neurodevelopment, neurodegenerative disorders, brain injury, etc. The company is currently developing two drugs for several serious neurological disorders in early childhood, for which there are no drugs currently.
In a major development for the company, the US partner of Nauren submitted an application to US FDA for trofinetide, a drug that treats Rett syndrome in adults and pediatric patients aged two years and older. This development has the potential to be a great commercial success for the company.
The current market capitalization of the company is s $806,180,326.
Stock Information
The last closing price of the stock was $6.40. The stock currently has great momentum. It has appreciated by 175.86% in the last 1 year. Also, it has outperformed the healthcare sector by 186.75% in the last 1 year. The great momentum and outperformance show the high level of demand for the stock driven by a strong future potential.
5. Probiotec Limited (ASX: PBP)
Probiotec is an ASX-listed company that deals with the development, manufacturing, and sale of pharmaceutical, nutraceutical, and consumer health products. It offers contract manufacturing and packing services. It has world-class facilities for developing and contract manufacturing pharmaceutical products in locations across Australia.
The current market capitalization of the company is $177,285,025.
Stock Information
The last closing price of the stock was $2.18. The current earnings per share of the stock are $0.106. The stock has remained mostly flat in the last 1 year. It is currently trading 0.91% down compared to 1 year before. However, the stock has outperformed the sector by around 10% in the same period. It has also outperformed the broader ASX 200 index by 9.73% in the last 1 year.
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