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Since the beginning of 2024, shares of CSL Ltd have risen by 2.5%, while Pro Medicus Limited is trading just 1.3% away from its 52-week high. Let’s take a closer look at what’s driving interest in these two ASX healthcare stocks and why they could be worth attention in the current market.
CSL Ltd (ASX:CSL)
CSL Ltd is a renowned global biotechnology company, known for developing and delivering innovative medicines that save lives and enhance public health. CSL operates through three key business units: CSL Behring, CSL Seqirus, and CSL Vifor.
- CSL Behring: Acquired in 2004, Behring manufactures and distributes blood plasma products, providing essential therapies for patients with life-threatening conditions.
- CSL Seqirus: Created through the rebranding of BioCSL and the acquisition of Novartis' flu-related business in 2015, Seqirus produces flu vaccines and provides pandemic-related services to governments.
- CSL Vifor: Focuses on treatments for iron deficiency and kidney care (nephrology), addressing critical health needs worldwide.
CSL has established a strong reputation among Australian investors for its consistent performance and reliable dividend payouts over the years. As healthcare costs continue to rise globally, many view CSL as a solid investment in the healthcare sector.
For a mature company like CSL Ltd, metrics like Return on Invested Capital (ROIC) and revenue growth are important indicators of long-term sustainability. In FY23, CSL Ltd posted an impressive ROIC of 11.80% and achieved a compounded revenue growth rate of 12.8% in recent years. With an ROIC above 10%, CSL demonstrates strong operational efficiency, as its cost of capital is likely lower than this threshold.
Pro Medicus Limited (ASX:PME)
Founded in 1983, Pro Medicus Limited is a leading provider of radiology IT software used by hospitals, imaging centers, and healthcare organizations worldwide. Pro Medicus offers a comprehensive suite of products that include Radiology Information Systems (RIS), Picture Archiving and Communication Systems (PACS), and advanced visualization solutions.
The flagship Visage software is a key part of the company's value proposition. It allows radiologists to view large medical image files remotely on mobile devices, enabling faster diagnostic decisions and improving patient outcomes. This cutting-edge technology supports a wide range of medical imaging needs, from patient scheduling to billing and image interpretation, positioning Pro Medicus as an innovative player in the healthcare IT space.
CSL Ltd Share Price and Valuation
One approach to quickly gauge CSL Ltd's share price valuation is by examining its dividend yield over time. The dividend yield represents the cash flow to shareholders, although it can fluctuate from year to year. Currently, CSL shares offer a dividend yield of approximately 1.34%, slightly below their 5-year average of 1.50%. This suggests that CSL shares are trading below their historical dividend yield, potentially offering an opportunity for long-term investors.
Both CSL Ltd and Pro Medicus Ltd are prominent players in the ASX healthcare sector, offering unique growth opportunities. CSL Ltd’s global reach and established reputation make it a strong candidate for those interested in blue-chip healthcare companies, while Pro Medicus Ltd stands out for its innovative technology in the rapidly evolving field of radiology IT.
As the healthcare sector continues to grow, these companies may be worth watching for those seeking exposure to long-term trends in medical innovation and patient care.
