Due to ageing populations, better technologies and treatments, and increasing chronic disease burden, demand for healthcare services is expected to continue to increase over the next few decades.
This bodes well for healthcare shares and has many tipping them to continue to outperform over the long term.
Two healthcare shares that are highly rated are listed below:
CSL Limited (ASX: CSL)
CSL is one of the world’s leading biotherapeutics companies. It is made up of the high quality CSL Behring and Seqirus businesses. CSL Behring is the global leader in plasma therapies and Seqirus is the second largest influenza vaccines business.
Both businesses have been growing at a solid rate in recent years and have been tipped to continue doing so in the future. This is due to their leading therapies and lucrative research and development pipelines.
CSL’s pipeline contains a number of highly promising products that have the potential to generate significant revenues in the future. This includes clazakizumab, which is being developed to treat kidney transplant rejection. This product alone could generate peak sales of US$5.4 billion eventually.
UBS recently retained its buy rating and $346.00 price target on CSL’s shares. This compares to the latest CSL share price of $304.14.
ResMed Inc. (ASX: RMD)
ResMed has been growing at a such a strong rate over the last decade it has now become one of the world’s leading sleep treatment companies. Pleasingly, it has started the new decade just as strongly as it finished the last. In FY 2020, it delivered a 15% increase in revenue to US$2,957 million and a 32% jump in net income to US$692.8 million.
The good news is that it has started FY 2021 strongly and appears well-placed to continue this positive form in the future. This is thanks to its world-class products and the massive number of undiagnosed sleep apnoea sufferers globally.
The company also has a rapidly growth digital health ecosystem, which reached over 12 million cloud connectable medical devices in 2020. This provides ResMed with strong recurring revenues and a material amount of high quality data.
Last month Credit Suisse put an outperform rating and $31.00 price target on ResMed’s shares. This compares to the current ResMed share price of $28.58.