With populations across the world ageing, demand for healthcare services is expected to rise strongly over the next couple of decades.
In my opinion, this makes the healthcare sector a great place to look for long-term buy and hold investments.
With that in mind I thought I would take a look at a couple of healthcare shares to see if there is an investment opportunity today. They are as follows:
Cochlear Limited (ASX: COH)
Whilst I think this implantable hearing solutions provider is one of the highest quality companies on the local share market, I wouldn't be a buyer of its shares at the current price. After a massive 35% gain year-to-date, Cochlear's shares are changing hands at approximately 42x trailing earnings. I feel this is a little on the expensive side given its full-year growth guidance.
Management has forecast FY 2018 net profit of between $240 million and $250 million, this represents year-on-year growth of between 7% and 12%. Though admittedly this could be given a boost from currency tailwinds as it was based on an average AUD/USD exchange of 80 U.S. cents.
Still, I don't think that currency tailwinds will be enough to generate growth that comes close to justifying the 42x earnings price tag. I would suggest investors hold off and wait for a better entry point.
Nanosonics Ltd. (ASX: NAN)
This infection control specialist's shares have done the opposite to Cochlear's and fallen reasonably sharply this year. The good news here is that I believe it has brought its shares down to a level that makes for a great entry point.
Especially with the long-term growth potential it possesses thanks to its best-in-class trophon EPR product. The disinfection technology continues to grow in popularity with hospitals around the world due to being environmentally friendly and wholly effective at disinfecting ultrasound probes.
As of the end of FY 2017 the trophon product's installed base had grown to 14,100 units globally. This equates to just under 12% of its estimated global market opportunity of 120,000 units.
