In Sickness And In Healthscope
CMC Markets | Oct 10, 2017 14:02
Originally published by CMC Markets
When you hear “healthcare sector” what do you think of? Hospitals and aged care? The Australian healthcare sector is all that and a lot more. They were lumped together when investors sought “defensive” earnings. An aging population and government payment of many bills dominated individual company features. As this desire for defensive earnings recedes the sector may be viewed in a more nuanced way.
It’s easy to underestimate diversity in the sector. There are hearing and anti-snoring device manufacturers, blood product makers, medical suppliers, pathologists and drug companies as well as the traditional medical services groups. The recent half year earnings reports saw responses at the company level, and share price performance varied enormously.
One to catch the eye is Healthscope (AX:HSO).
HSO traded to all-time lows into its August half year result announcement. Then a miss on earnings, and forecasts some analysts thought were too optimistic, saw share price targets slashed. The stock fell a further 15%.
Note most analysts’ earnings estimates are below HSO management’s guidance. Even at these lower levels the Pprice to consensus earnings ratio is around 17.5x – close to the broad market and well below the healthcare sector average.
This healthcare provider is not an income play. A key question revolves around the current hospital build – when will the site start earning, and how high will those earnings be? Given the conservative consensus view and the lower share price it’s time investors take a good look at this hospital care provider in development.
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.