S&P/ASX 200 Health Care Index (ASX: XHJ) shares have crumbled 33% over 12 months, and not just because of CSL Ltd (ASX: CSL).
While CSL's market capitalisation has halved over two years, several other sector heavyweights have also tumbled to multi-year lows.
In fact, eight of the 10 largest ASX 200 healthcare shares are trading at or close to multi-year or 52-week lows today.
Is this an opportunity to buy the highest quality companies in the ASX 200 healthcare sector on the cheap? Or a reason to steer clear?
Blackwattle Large Cap Quality Fund portfolio managers Joe Koh and Elan Miller comment:
The sector as a whole has faced multiple headwinds, including currency and tariffs for the large multinationals and labour and cost pressures for the domestic players.
With this in mind, let's look at the state of play for the healthcare sector's three biggest players, and how the brokers rate them today.
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1. CSL Ltd (ASX: CSL)
The CSL share price is $141.22, down 2.2% on Friday.
CSL remains the sector's largest company by a long shot with a market capitalisation of $70.06 billion.
The blue-chip ASX 200 healthcare share has fallen 18% year to date (YTD) and 44% over the past 12 months.
The CSL share price touched an eight-year low of $133.35 last week.
Disappointing earnings results, a company restructure, and a drop in vaccination rates worldwide are among the concerns for investors.
This week, UBS reiterated its buy rating on CSL shares with a 12-month target of $235.
Meanwhile, Ord Minnett has a hold rating with a $198 target.
In a note last month, the broker said:
Cost performance has improved significantly as CSL's business restructuring plans are implemented but revenue growth is still proving hard to come by, and the CEO's exit adds a degree of difficulty to the biotech's outlook.
Despite the apparent upside on offer, Ord Minnett will need more evidence of top-line growth and margin expansion before we can become more constructive on CSL.
2. Sigma Healthcare Ltd (ASX: SIG)
The Sigma Healthcare share price is $2.60, down 1% on Friday.
Sigma Healthcare, which owns a network of chemists, has a market capitalisation of $30.24 billion.
This ASX 200 healthcare share has fallen 12% YTD and 11% over the past year.
Sigma shares slid to a 15-month low of $2.58 in earlier trading today.
The stock has gone through a correction after reaching heady levels last year due to the Chemist Warehouse merger.
The Sigma Healthcare share price reached a multi-decade high of $3.28 in June last year.
This week, Ord Minnett upgraded Sigma Healthcare shares to a buy rating but lowered its 12-month target from $3.40 to $3.30.
Jefferies has also upgraded the ASX 200 healthcare share to a buy rating with a $3.05 target.
Morgans downgraded the stock from buy to accumulate after reviewing the company's 1H FY26 report last month.
The broker said:
SIG posted a solid 1H26, which was in line with consensus.
The highlights included solid CW LFL sales growth (up 15%), revenue growth higher than cost growth by 4.5%, and synergy targets on track.
We move to an ACCUMULATE (was Buy) due to YTD share price strength.
Morgans has a 12-month target of $3.36.
3. ResMed CDI (ASX: RMD)
The ResMed share price is $32.34, down 0.5% today.
The ASX 200 healthcare share has fallen 10% YTD and 9% over the past year.
ResMed, which makes CPAP devices to treat sleep apnoea, has a market cap of $18.66 billion.
ResMed shares fell to a 20-month low of $31.77 per share on Monday.
Last month, Ord Minnett reiterated its buy rating on ResMed shares.
Due to the higher Australian dollar, the broker reduced its AUD price target from $44.56 to $43.70.
Ord Minnett explained:
ResMed is now guiding to an FY26 gross margin of 62–63%, up from 61–63% previously, and we have upgraded our own forecast to 62.4% from 64.1% as we incorporate cheaper input costs and production efficiencies into our numbers.
A mark-to-market adjustment for the stronger Australian dollar currency means our target price in AUD falls to $43.70 from $44.56 despite a rise in our EPS forecasts.
We maintain a strongly positive view on ResMed as strong earnings growth boosts its net cash position, which should support higher dividends and more capital management.
On The Bull last week, Nathan Lodge from Securities Vault revealed a hold rating on this ASX 200 healthcare share.
Lodge said:
Structural demand drivers, including ageing populations, increasing diagnosis rates and broader awareness of sleep health, continue to support long term growth.
However, a strong share price recovery following concerns about the impact of weight loss drugs on sleep apnoea treatment appears to leave much of the near-term optimism priced into the stock.
While the company's fundamentals remain robust, the valuation reflects its market leadership and growth outlook.
Investors may prefer to retain existing positions, while awaiting further earnings expansion, or more attractive entry points.
The ResMed share price was whacked in 2023 due to the rising use of GLP-1 medicines like Ozempic and Mounjaro for obesity.
In March 2024, ResMed released in-house research showing that GLP-1 medicines were actually a tailwind, as they encouraged people to see their doctor about their weight, leading to more diagnoses of sleep apnoea and a 10% increase in CPAP device usage.
