The healthcare sector could be a good place to look for long term investment options. This is due to a number of positive tailwinds that are supportive of growth such as ageing populations and increased cases of chronic disease.
But which ASX 200 healthcare shares should you consider? Here are two that are rated highly:
The first ASX 200 healthcare share to look at is CSL. It is one of the world’s leading biotherapeutics companies.
It has been an exceptionally positive performer over the last decade due to a number of factors. This includes successful acquisitions, its high level of investment in research and development (R&D) activities, its growing plasma collection network, and increasing demand for its leading therapies and vaccines.
In respect to its therapies, CSL’s portfolio includes lucrative and life-saving products such as Privigen, Hizentra, Idelvion, and Afstyla. And thanks to its almost billion-dollar (and growing) annual investment in R&D, this portfolio will continue to expand in the future.
While the pandemic has hit plasma collections and could lead to elevated costs in the near term, this headwind is only expected to be temporary. In light of this, it could be worth being patient with its shares. UBS currently has a buy rating and $3.30 price target on the company’s shares.
Sonic Healthcare Limited (ASX: SHL)
A second ASX 200 healthcare share to look at is Sonic Healthcare. It is a leading medical diagnostics company with operations across the world.
Sonic certainly has had the wind in its sails over the last 12 months. This led to the company reporting a 33% increase in half year revenue to $4.4 billion and a 166% jump in first half net profit to $678 million in February. Pleasingly, an equally strong second half is expected.
This is being driven largely by strong demand for COVID-19 testing services but also positive performances across the rest of the business.
One broker that is a fan of the company is Credit Suisse. Last month it retained its outperform rating and lifted its price target to $43.50.
It expects demand for its testing services to increase as more transmissible COVID variants spread widely and cause an uptick in infections. It expects this to support strong earnings, allowing Sonic to pay down debt and support potential acquisitions.