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Is Medlab Clinical Ltd the best small cap healthcare buy on the ASX?

Stocks in the healthcare sector are getting a lot of airplay at the moment, with the likes of Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX: RHC) experiencing sharp falls in its share price off the back of rising health premiums out of NIB Holdings Limited (ASX: NHF) and Medibank Private Ltd (ASX: MPL).

But at the small cap end of the scale brokers are circling biological research company Medlab Clinical Ltd (ASX: MDC) as a potential buy in, albeit, it is only one to consider for investors who don’t mind speculative stocks in their portfolio.

Analysts at Asia Pacific Prudential Securities (APP) have placed a buy rating on Medlab with a $1.20 target price – Medlab shares were down 0.7% to 66c per share at the time of writing.

It is forecast by APP that Medlab is about to enter a period of strong earnings growth off the back of its medicinal marijuana products with NanaBis.

Medlab completed a $24 million capital raising in January this year, but will likely need to raise more capital soon for the rollout of its new products.

It’s a speculative pick for sure, and investors would have to do their own research before they make the call on Medlab, but the company has been granted licenses to supply Schedule 8 drugs, which will include NanaBis under the governments Special Access Scheme (SAS).

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has recommended NIB Holdings Limited and Ramsay Health Care 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 Scott Phillips.

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