ASX healthcare stocks have faced significant headwinds over the last 12 months.
However, this has created a value opportunity for several healthcare companies.
One in particular that is drawing positive attention from brokers is Sonic Healthcare Ltd (ASX: SHL).
It is the largest private medical laboratory and pathology services operator in Australia, the United Kingdom, Germany, and Switzerland.
It is also a major provider of diagnostic imaging in Australia and is the largest medical centre operator in the country.
After falling 18% over the last 12 months, a new report from Bell Potter suggests this ASX healthcare stock could rebound significantly in the near future.
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FY26 Results Preview
The team at Bell Potter provided an outlook on what investors can expect from the company's upcoming FY26 results.
Bell Potter estimates revenue +0.6%, EBITDA +1.5%, and NPAT +0.7% to be slightly ahead of consensus.
Bell Potter argues that pathology is increasingly a scale game. If lower fees force weaker operators out or accelerate industry consolidation, Sonic Healthcare could potentially gain market share and offset some of the fee pressure through greater efficiency.
The new CEO has now been in the role for six months, so investors will want a clearer strategy and outlook. Bell Potter sees potential for positive guidance/upgrades if several areas improve:
- Margin benefits from the Swiss and German acquisitions
- Continued strength in the UK, particularly more NHS outsourcing wins
- Improvement in the US business following its operational review
Given the new CEO has had over six months in the role, the FY26 result offers an opportunity to address several issues and set a clear direction for investors.
Big upside for ASX healthcare stock
Based on this guidance, the team at Bell Potter have retained their buy recommendation for this ASX healthcare stock.
The broker also has a price target of $28.75 on Sonic Healthcare shares, which indicates an upside potential of over 27%.
SHL is trading close to decade lows on an EV/EBITDA basis and is relatively well priced against its domestic large cap healthcare peers, with a FY27e PE of c.16x being amongst the lowest in the peer group.
We would expect that should the recent recovery in large cap healthcare valuations continue, it would be a tailwind for SHL, particularly if it can impress in the forthcoming business update and the CEO impresses investors, despite being early in his tenure.
