2 ASX 200 shares benefitting from the surge in COVID tests

Sonic is one of the ASX shares benefiting from a high level of COVID testing.

| More on:
A man screws up his face as his nose is swabbed for a COVID test.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There are a few S&P/ASX 200 Index (ASX: XJO) shares that are making a lot of revenue and profit from the high level of COVID-19 testing.

A few key providers are providing millions of tests, such as Sonic Healthcare Ltd (ASX: SHL) and Healius Ltd (ASX: HLS). The smaller, non-ASX 200 business Australian Clinical Labs Ltd (ASX: ACL) is also involved in testing.

How is testing benefiting the ASX 200 healthcare shares?

According to reporting by The Australian there has been a total of more than 55 million PCR tests done. The testing providers are now receiving a $85 million Medicare rebate for every test, which has gone up from $28.65 per test at the start of pandemic.

On 18 November 2021, Sonic disclosed that it had conducted 36 million COVID-19 PCR tests in total to date, though Sonic operates in several northern hemisphere countries like the USA, Germany, the UK and Switzerland.

Sonic also performs vaccinations. It had provided more than 1 million vaccinations when it announced a trading update in mid-November.  

Whilst rapid antigen tests are quickly becoming a key part of the testing system, it’s still thought that PCR testing will continue for the next couple of years at least.

Healius noted at its recent annual general meeting (AGM) (in October, before the Omicron surge) that it was doing more than 40,000 COVID tests per working day with commercial COVID testing performing “well” in industries like sports and film production. The ASX 200 share’s underlying net profit after tax almost tripled from $53.1 million to $148.4 million.

Healius said that it expected COVID PCR testing to be part of the health landscape for years.

How are investors seeing the situation?

The Australian reported that Citi is expecting more COVID testing in FY22 and FY23, as well as a continuation of testing going into FY24.

Investors have sent the share prices of the three companies mentioned much higher in recent times.

The Sonic Healthcare share price has risen 24% over the last six months and 39% over the last year at the time of writing.

Over the last six months the Healius share price has risen by 13% and it has increased by 36% in the past year.

The Australian Clinical Labs share price has surged 37% in just the last month and over the past six months it has soared 75%.

Are those ASX 200 shares still opportunities?

The broker Morgans has rated both Healius and Sonic Healthcare as buys with price targets that are approximately 10% higher than where they are now. It noted that both businesses are also making bolt-on acquisitions to boost earnings over the longer-term.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Australian Clinical Labs Limited and Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Healthcare Shares

Five healthcare workers standing together and smiling.
Healthcare Shares

Up 38% in a month, what’s sparking the recent Race Oncology share price run-up?

What a month it has been for Race Oncology shareholders.

Read more »

Three businesspeople leap high with the CBD in the background.
Healthcare Shares

Why is the Nanosonics share price jumping 10% on Wednesday?

Nanosonics shares are jumping on Wednesday...

Read more »

A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movements
Healthcare Shares

Why this broker is tipping the ResMed share price to rise 17%

A leading broker says ResMed shares can rise strongly from here...

Read more »

patient with doctor, medical company, medical insurance
Healthcare Shares

Beating the benchmark: Why this broker is betting on the CSL share price for outperformance

Could plasma demand boost the CSL share price?

Read more »

A doctor appears shocked as he looks through binoculars on a blue background.
Healthcare Shares

Here’s what happened to the CSL share price in June

CSL shares were relatively positive performers in June...

Read more »

Two happy scientists analysing test results.
Healthcare Shares

Up 13% in a month, Polynovo share price bounces back after being dumped from ASX 200

What's going on with the Polynovo share price?

Read more »

health workers shake hands and congratulate each other on good news
Share Gainers

This ASX All Ordindaries healthcare share is ripping 17% higher amid a new contract win

Investors seem to like the contract win from this healthcare player.

Read more »

Two researchers discussing results of a study with each other.
Healthcare Shares

Here’s how ASX 200 healthcare shares performed in June

Healthcare shares were a tad ill in June.

Read more »