3 healthcare shares every investor should read up on

Australia’s world-class healthcare sector puts many other developed nations to shame, so it makes sense that we are also the breeding ground for some pharmaceutical, biotechnology and life sciences companies that have big things on the horizon and growth potential to match.

These three healthcare stocks are making ground globally with their innovative products and medical discoveries and every Australian investor should have them on their radar.

CSL Limited (ASX: CSL)

CSL Limited, a biopharmaceutical company that researches, develops, manufactures and markets products to prevent and treat coagulation disorders, has been revered by many for its long-term potential.

And in the short term it’s not doing too shabby either.

CSL reported its half-year results on February 13, booking a net profit of US$1.1 billion – up 35% from the previous corresponding period.

Revenue from continuing operations rose by 13% to US$4.1 billion and shareholders were happy to receive a 23% increase in interim dividend, up to US79c per share.

CSL has benefited from the launch of Haegarda and Idelvion products of late – drugs for the prevention of hereditary angioedema and therapy for haemophilia B respectively, with flu vaccine sales in the US also set to drive profits for the remainder of FY18.

Shares in CSL opened at $164.29 today, up from $117.48 at this time last year with the price trend on the up with few periods of volatility.

While many investors may be deterred by such an expensive price per share, the overall bias is that prices will continue upwards for the time being with upper bound forecasts at $166.69 for the short term as the share price sits 17.1% above its 200-period moving average.

Healthscope Ltd (ASX: HSO)

Shareholders in private healthcare operator Healthscope Ltd have weathered a rough ride since the share listed on the ASX in 2014 at $2.10, but prices seem to be recovering from a slide down to just $1.62 in September 2017, opening today at $1.90.

Healthscope comes up against S&P/ASX 200 rival Ramsay Health Care Ltd (ASX: RHC) in the private healthcare provider space, with Healthscope running 45 Australian private hospital and a market-leading international pathology operation.

Healthscope shares gained 6.5% to $1.89 the day after the company posted a 12.6% drop in half-year profit with investors clearly keen to throw their weight behind the healthcare stock despite the profit dip, perhaps buoyed by the company’s expectations EBITDA would grow to close off FY18. It also has a diversification of revenue streams with a long-term contract in its New Zealand and Asian pathology operations.

Healthscope shareholders will receive a 3.2c per share unfranked interim dividend on March 23 and the earnings outlook remains flat with last year for key hospital divisions for FY18.

Nanosonics Ltd (ASX: NAN)

Infection prevention is front and centre across the globe at the moment as superbug stories send entire continents reaching for their face masks.

Involved in the manufacturing and distribution of the trophon EPR ultrasound probe disinfector, Nanosonics received some flak for its recent interim result, with revenue down 17% and a 64% drop in pre-tax profit from the previous corresponding period.

But despite the dramatic headlines, there was still plenty of good to be found in the results, with the company poised for strong growth in trophon EPR sales globally, with another infection prevention solution product in the works due to strong demand from the sector.

If Nanosonic’s future products are as successful as their current, growth looks likely and any share price slide off the back of unfavourable results may pave the way for a buying opportunity as Nanosonic shares sit at $2.71 at the time of writing, down from its pre-results release price of $2.98 on February 21.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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