The healthcare sector has been well and truly out of form this year. This has seen the S&P/ASX 200 Health Care index lose approximately 10% of its value compared to a small gain by the benchmark S&P/ASX 200 index.
While this is disappointing, it could have created a buying opportunity for patient investors. Especially if it rebounds like the tech sector did after it was sold off in 2022. The S&P ASX All Technology index is up 23% this year.
With that in mind, here are a couple of high-quality ASX 200 healthcare shares that could be buys according to analysts:
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CSL Limited (ASX: CSL)
It's not often that the CSL share price is trading within touching distance of a 52-week low, but that's the case now.
Morgans appears to see this as a great time to pick up the ASX 200 healthcare share. In fact, the broker currently has the biotherapeutics giant on its best ideas list with an add rating and a $328.28 price target. This implies a potential upside of approximately 31%. The broker said:
While shares have struggled of late, we continue to view CSL as a key portfolio holding and sector pick, offering double-digit recovery in earnings growth as plasma collections increase, new products get approved and influenza vaccine uptake increases around ongoing concerns about respiratory viruses, with shares trading at 25x, a substantial discount (20%) to its long-term average.
Sonic Healthcare Ltd (ASX: SHL)
Analysts at Citi think that this medical diagnostics company could be a great option in the healthcare sector. Its analysts have a buy rating and a $38 price target on its shares. This implies a potential upside of 27% for Sonic Healthcare's shares from current levels.
Citi is expecting a reasonably subdued year in FY 2024 before a sharp jump in earnings the following year. It said:
Earnings in FY25 and beyond should be supported by several factors including 1) a new revenue collection system in the US which may increase revenue by low-single-digit from FY25 (not in our forecast), 2) acquisitions becoming tailwinds to margins from FY25, 3) potential benefits from digitization & AI in anatomical path, 4) radiology growth. ND/EBITDA of ~1.1x (FY24e) remains well below l-t average of 2.5x, leaving room for acquisitions/new contracts/share buyback.
