The Healius Ltd (ASX: HLS) share price has performed swimmingly in 2021. Since the start of the year, the health diagnostic company's shares have gained an impressive 32% to $4.98.
A boost from COVID-19 testing has given Healius some extra sheen recently. Considering this, the Perennial Value Management team thinks there might be suitors knocking at the door.
Takeover target in the making
In its June update, the Perennial team shared its monthly takeaways with investors of the Perennial Value Australian Shares Trust. The trust fund aims to invest in a range of 20 to 70 ASX-listed shares which offer good value.
Furthermore, the fund has outperformed the S&P/ASX 200 Index (ASX: XJO) over the past year. At the end of June, the trust had returned 30.5% net of fees, compared to ~26.4% from the benchmark index.
In contrast to the index, Perennial's trust is overweight Seven Group Holdings Ltd (ASX: SVW), Insurance Australia Group Ltd (ASX: IAG), Santos Ltd (ASX: STO), Tabcorp Holdings Limited (ASX: TAB), and Healius.
Speaking of Healius… the fund manager considers the company a potential takeover target. The increased dependence on pathology services has brought to light the importance of such services. Likewise, the pandemic has demonstrated the high level of government funding available to the industry.
Considering Healius is the second-largest pathology services provider in Australia, it has benefitted from the additional funding throughout the pandemic. This has come at a handy time as it leans out operations.
On this topic, the Perennial investment team stated:
In many ways, parts of the healthcare sector such as pathology can be thought of as regulated utility services, with stable earnings largely derived from government funding. As a result, infrastructure-style investors are increasingly looking to these sorts of businesses, raising the potential for corporate activity in the space
Healius snapshot for ASX investors
The Healius share price set a new 52-week high on the ASX back in June. Since then, shares have slipped slightly despite analysts being positive about the company's outlook.
Recently, Goldman Sachs revealed it expects a strong FY21 result from Healius. This is based on the consensus view that Australian COVID testing volumes would steadily fall through FY21 was far too conservative.
Based on the current Healius share price, the company holds a market capitalisation of $3.1 billion, with a price-to-earnings (P/E) ratio of 38.8 times.
