This ASX healthcare stock is up 12% in 2 days since All Ords inclusion: Should you buy?

The latest member of the All Ordinaries index is getting some love this week.

| More on:
A man wearing a white coat and glasses is wide-mouthed in surprise.

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

4DMedical Ltd (ASX: 4DX) shares are having another positive session.

At one stage today, the ASX healthcare stock was up as much as 7.5% to 78 cents.

When its shares hit that level, it meant they were up 12% in the space of just two days.

Why is this ASX healthcare stock jumping this week?

The catalyst for this rise has been news that the company's shares will be added to the All Ordinaries index later this month.

According to the update from S&P Dow Jones Indices, the medical research technology company is one of a number of new additions that will join the famous All Ordinaries index at the next quarterly rebalance on 18 March.

Furthermore, it will also join the S&P/ASX All Technology Index on the same day in the place of the ejected FINEOS Corporation Holdings PLC (ASX: FCL).

Is this good news?

Generally speaking, this can be very good news for a company's share price.

That's because fund managers often have restrictions on the shares they can buy. This is to stop them from risking client funds in speculative investments.

It's possible that some fund managers have investment mandates that allow them to invest in All Ordinaries shares. So, if they have been waiting to grab a piece of this ASX healthcare stock, this rebalance will allow them to finally press the buy button.

In addition, index funds that track the All Ordinaries or S&P/ASX All Technology Index will need to buy shares to reflect the changes.

Should you invest?

Bell Potter is very positive on the company, though it sees it as a higher risk option.

The broker currently has a speculative buy rating and $1.10 price target on the ASX healthcare stock.

This implies potential upside of over 40% for investors from current levels.

Motley Fool contributor James Mickleboro 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Healthcare Shares

Woman going for a scan reassured by doctor
Healthcare Shares

How AI could boost this ASX 300 healthcare stock

The Firetrail investment management team see AI providing a 'material tailwind' for this stock.

Read more »

A man in a white coat holds a laptop in one hand and his head in the other, it's bad news.
Healthcare Shares

Why is the ResMed share price diving 5% today?

Weight loss wonder drugs are weighing heavily on this stock.

Read more »

a doctor in a white coat makes a heart shape with his hands and holds it over his chest where his heart is placed.
Healthcare Shares

Why is the Telix share price jumping 15% to a record high?

This healthcare stock is scaling new heights on Thursday. But why?

Read more »

Stressed thoughtful old female general practitioner doctor physician looking in distance, considering difficult medical problem solution or illness treatment, working on computer in clinic office.
Healthcare Shares

How much do you need to invest in CSL shares for $8,000 in annual dividends?

CSL's dividends are exponentially more valuable for long-term investors.

Read more »

smiling health care workers in a medical setting
Healthcare Shares

'Critical unmet need': Why everyone is talking about this ASX 200 healthcare stock

This healthcare stock has been given a boost from the US FDA today.

Read more »

Senior woman with caregiver in the garden
Healthcare Shares

Why this ASX 200 stock is a retiree's dream

I think this is a very healthy and resilient stock.

Read more »

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

3 ASX 200 healthcare stocks that could deliver big returns for investors

Analysts see a lot of value in these stocks at current levels.

Read more »

A team of people giving the thumbs up sign representing APA and Wesfarmers doing a deal to study green hydrogen transport using an APA gas pipeline
Healthcare Shares

Why are so many top fundies overweight on CSL shares?

This is a healthy opportunity, according to a number of fund managers.

Read more »