4 Healthcare Stocks to Watch Amid Another Round of Stock Market Downtrend

  • Jun 29, 2020 AEST
  • Team Kalkine
4 Healthcare Stocks to Watch Amid Another Round of Stock Market Downtrend

Summary

  • While several countries are struggling to contain the first wave of COVID-19, some countries are reporting a second wave, which has once again impacted the global share markets.
  • The virus has created various opportunities in the healthcare sector, be it to develop a safe and effective vaccine or treatment, or to provide safety and preventive measures.
  • Sonic Healthcare stated that despite the pandemic, it would deliver earnings in-line with the previous year.
  • ResMed Inc reported a 16% increase in its third-quarter revenue while Zoono Group profited amid COVID-19, providing an outstanding return of 322.90% in the last six months.

Prompted by a second wave of coronavirus infection in several countries, share markets around the world plunged, eliminating all the gains of the last few sessions.

Several nations across the globe are struggling to contain the swift spread of the novel coronavirus. Also, per some media reports the second wave of coronavirus has emerged in China. 

The second wave of COVID-19 is not a scientific term with well-characterised factors; this term is used for describing the severe rise in coronavirus infection that appear after the first wave has been suppressed in that particular area.

HAVE YOU READ: Is the Second Wave of COVID 19 Already Approaching?

Due to the fear of the second wave of COVID-19, stock markets across the globe are feeling the heat. However, there are several opportunities in the healthcare sector, and the companies are circling their wagons to find out a treatment or vaccine for COVID-19. Moreover, some healthcare companies are working on preventive measure and diagnostics. They and are engaged in the development of sanitisers, masks as well as diagnostic kits to combat the pandemic.

With this backdrop, we will shed some light on four ASX-listed healthcare stocks whose stock ended in the green last week.

Let us zoom lens for -SHL, RMD, RHC, ZNO.

Sonic Healthcare Gives Guidance Update, Anticipates Flat Earnings Despite COVID-19 Pandemic

Sydney-headquartered healthcare player Sonic Healthcare Limited (ASX:SHL) provides services across the globe. SHL is involved in providing primary care medical services, laboratory, and imaging services. 

On 24 June 2020, SHL revealed that for the eight and half months to mid-March 2020, trading results were in line with the earnings guidance as disclosed previously. Though, in late March, the Company encountered a dramatic decline in the numbers of patients as well as revenues across international businesses due to pandemic and related preventive measures.

Notably, in the past few weeks, the majority of SHL’s divisions have resumed to pre-COVID base numbers of patients along with revenues.

The trading results of Sonic for March and April-20 were substantially below than predicted, with May outcomes stronger than anticipated. Sonic disclosed that this positive trend has continued through June up to now. While there remain uncertainty and volatility associated with the COVID-19 pandemic; Sonic is now able to give new earnings guidance for FY20.

For FY19 Sonic reported statutory EBITDA of A$1.075 billion and now the Company foresees reporting similar underlying EBITDA for FY20, not including the impact of the new lease accounting standard AASB 16, which came into effect from 1 July 2019.

Stock Performance: On 26 June 2020, SHL last quoted at A$30.280, up by 0.265% with a market cap of approximately A$14.35 billion. The stock was trading at A$30.200 on 29 June (at 12:43 PM AEST).

ResMed’s Third-quarter Revenue Climbed by 16%

ASX-listed world-leading digital health company ResMed Inc (ASX:RMD) offers innovative solutions for treating and keeping people away from the hospital, and offering superior-quality lives. The cloud-connected medical devices of the Company transform care for patients of COPD, sleep apnea, and some other chronic illness.

ResMed updated the market with its third-quarter (ended 31 March 2020) results, on 30 April 2020,). The highlights are-

  • Revenue of RMD rose by 16% to US$769.5 million and up by 17% on a constant currency (cc) basis.
  • GAAP gross margin of the Company climbed by 58.4% with a non-GAAP gross margin expanded 70 bps to 60.0%.
  • Net operating profit of ResMed jumped by 39% and non-GAAP operating profit up by 31%.

ResMed is focused on preventing COVID-19 via enhanced ventilator production and with the ongoing partnership & support of global shareholders.

It is noteworthy to mention that ResMed is delivering world-leading solutions to the governments, physicians, health authorities, hospitals, providers, and most importantly, to the patients.

Stock Performance: On 26 June 2020, RMD last quoted at A$27.160, climbing by 2.29% from its previous close. RMD stock has delivered an exceptional return of 21.36% in the last six months. The stock was trading at A$27.210 on 29 June (at 12:43 PM AEST).

Ramsay Completes A$300 Million Share Purchase Plan

ASX-listed one of the largest and most diverse private health care players worldwide Ramsay Health Care Limited (ASX:RHC) provides high-quality services as well as offers outstanding patient care & hospital management. The Company offers primary and severe healthcare services in eleven nations by its 480 facilities.

The Company remains dedicated towards its strategy and continued to create shareholder value:

Source: Company's presentation

On 25 May 2020, Ramsay informed market by providing an update on ASX that the Company has completed its Share Purchase Plan announced on 29 April 2020, for raising A$300 million. In this Share Purchase Plan, a total of 5.37 million new fully paid ordinary shares are anticipated to be issued.

Mr McNally, CEO and Managing Director Ramsay stated:

Stock Information: On 26 June 2020, at the end of trading session Ramsay stock closed at A$65.490 up by 1.127% from its previous close. The market cap of RHC stock stood at A$14.82 billion. The stock was trading at A$65.180 on 29 June (at 12:43 PM AEST).

Zoono Group Profited Amid COVID-19 Turmoil

New Zealand headquartered ASX-listed global healthcare sector player Zoono Group Limited (ASX:ZNO) provides environmentally-friendly antimicrobial solutions to improve well-being and health via safe, nontoxic, innovative, and durable germ protection.

Antimicrobial solutions of Zoono have received regulatory approvals, and its technologies are supported by independent testing performed in worldwide laboratories.

The Z-71 Microbe Shield surface sanitiser and Germ Free24 hand sanitiser of Zoono Group tested more than 99.99% effective against the surrogate for the novel coronavirus.

According to the latest quarterly rebalance of S&P/ASX indices, Zoono Group has been added to All Ordinaries, effective 22 June 2020.

In May 2020, ZNO disclosed that its B2B sales invoiced in surplus of unaudited NZ$11.0 million which do not include online consumer sales for April 2020. The Company signed many new distribution agreements in Europe and the UK.

In Australia, the TGA approved an amendment to allow the Company to claim that its Z-71 Microbe Shield surface sanitiser is an effective disinfectant for hard surfaces against coronavirus, germs, microbes, and bacteria.

Moreover, in late April 2020, Zoono has signed an Australian distribution agreement with Johns Lyng Group Limited (ASX:JLG) for B2B market across Australia. With this agreement, Johns Lyng aims to make sanitiser of Zoono widely accessible in commercial markets across Australia.

Overall, the Company is well-positioned for meeting the continued need for its Z-71 Microbe Shield surface and hand sanitiser products during the COVID-19 pandemic.

Stock Performance: On 26 June 2020, ZNO last quoted at A$2.770 climbed by 2.974% from its previous close. The market capitalisation of Zoono stood at A$440.12 million, with nearly 163.61 million shares trading on ASX. Zoono Group has delivered an outstanding return of 304.38% on a YTD basis and 322.90% in the last six months. The stock was trading at A$2.740 on 29 June (at 12:43 PM AEST).

 


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