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2 excellent healthcare ASX shares with strong long term growth potential

healthcare asx share price rise represented by happy doctor
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Because of a number of favourable tailwinds including ageing populations, better technologies and treatments, and increased chronic disease burden, demand for healthcare services is expected to increase strongly over the next few decades.

As a result of this, the healthcare sector has been tipped as an area of the market to consider for long term investments.

But which healthcare ASX shares should you buy? Two that are highly rated are listed below:

Cochlear Limited (ASX: COH)

The first ASX healthcare share to look at is Cochlear. It is a global leader in the development, manufacture, and distribution of cochlear implantable devices for the hearing impaired.

After being hit hard by the pandemic, Cochlear bounced back incredibly strongly during the first half of FY 2021. In fact, for the six months ended 31 December, Cochlear recorded an underlying net profit of $125.3 million.

This was down just 4% in constant currency from its record first half profit a year earlier. It is worth remembering that the prior corresponding period was before COVID-19, which demonstrates just how quickly it has rebounded.

Positively, due to its strong market position and the industry’s high barriers to entry, Cochlear looks well-placed for growth over the long term. Especially given how hearing loss is typically a part of getting older and the number of over 65s is expected explode over the coming decades.

Macquarie is positive on the company. Its analysts currently have an outperform rating and $245.00 price target on Cochlear’s shares.

Pro Medicus Limited (ASX: PME)

Another ASX healthcare share to look at is Pro Medicus. It is a healthcare technology company that provides healthcare organisations with radiology information systems, picture archiving and communication systems, and advanced visualisation solutions.

Pro Medicus has been growing strongly over the last few years. This has been driven by its industry-leading technology and the structural shift away from legacy systems.

Positively, the company has continued this positive form in FY 2021. For example, in February the company reported a 7.8% increase in revenue to $31.6 million and a 25.9% jump in underlying profit before tax to $18.76 million.

The good news is that more of the same is expected in the second half. Particularly given how Pro Medicus has won a number of lucrative contracts with major healthcare institutions since the turn of the year.

Looking ahead, the company still has a large pipeline of sales opportunities that could be converted in the near future and drive further growth.

Goldman Sachs is a fan of Pro Medicus. The broker currently has a buy rating and $53.80 price target on its shares.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Pro Medicus Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and Pro Medicus Ltd. 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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