Does MM like healthcare stocks HLS & CAJ?

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Question asked 23/07/2022

Does MM like healthcare stocks HLS & CAJ?

Hi James & Team, Can I have your latest thoughts on CAJ - Capitol Health (has disappointed since purchase at 38c on 21/9/21) and HLS - Healius. Do you see upside for these two health care stocks in the near term? or are they a hold for longer term. Thanks. Debbie

Answer

Hi Debbie,

Medical and pathology operator Healius (HLS) has struggled through 2022 with its shares down -29% year-to-date as Covid testing numbers fall dramatically as RAT’s are adopted by virtually everybody. Last month the market was disappointed with the companies update, it expects EBIT for the first 11-months of the year to be $473m, and while it is more than double the same period in FY21, it’s well behind consensus for the FY of $553m with just one-month remaining. We believe the risks are leaning towards further disappointment here.

We continue to like CAJ on valuation grounds, we think it’s simply too cheap for the quality of their business while it’s also important to note that in a recessionary environment 80%+ of CAJ spending is Medicare based, providing downside protection alongside a balance sheet that has very minimal debt.

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Healius (HLS)

LAST UPDATED 21/07/2022 16:00

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