ASX health stocks rise 1% in past five days outpacing broader markets
\nAvita Medical releases strong preliminary FY23 results, enters distribution deal
\nInterest continues to grow in merger of Sigma Healthcare and Chemist Warehouse\u00a0<\/p>\n
Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 26 years, explains what the movers and shakers have been doing in health and gives his ASX Powerplay.\u00a0<\/p>\n
There\u2019s an old saying \u201clove is blind\u201d, meaning that when we\u2019re in love with someone we cannot see their imperfections or faults.<\/p>\n
Now the saying has gained scientific support with an Australian study bringing us closer to understanding romantic love\u2019s transformative effect on the brain.<\/p>\n
The collaboration between researchers from the Australian National University, University of Canberra, and University of South Australia has explored how a specific brain region elevates our romantic partner during the initial stages of love.<\/p>\n
This research, recently published in the journal Behavioural Sciences<\/em><\/a>, examined the connection between the brain\u2019s behavioural activation system and romantic love, and involved a survey of 1556 young adults self-identifying as being in love.<\/p>\n The survey delved into participants\u2019 emotional responses to their partners, their behaviours in their presence, and the extent to which they prioritised their partners above everything else.<\/p>\n Findings reveal that falling in love alters brain activity, leading us to prioritise our loved one as the focal point of our existence.<\/p>\n ANU lead researcher and PhD student Adam Bode says the study sheds light on the mechanisms that cause romantic love.<\/p>\n \u201cWe actually know very little about the evolution of romantic love,\u201d Bode says.<\/p>\n \u201cAs a result, every finding that tells us about romantic love\u2019s evolution is an important piece of the puzzle that\u2019s just been started.\u201d<\/p>\n Bode says its thought that romantic love first emerged some five million years ago after we split from our great ape ancestors.<\/p>\n \u201cWe know the ancient Greeks philosophised about it a lot, recognising it both as an amazing as well as traumatic experience,\u201d he says.<\/p>\n \u201cThe oldest poem ever to be recovered was in fact a love poem dated to around 2000 BC.\u201d<\/p>\n University of Canberra academic and UniSA Adjunct Associate Professor, Dr Phil Kavanagh, says the study shows that romantic love is linked to changes in behaviour as well as emotion.<\/p>\n \u201cWe know the role that oxytocin plays in romantic love, because we get waves of it circulating throughout our nervous system and blood stream when we interact with loved ones,\u201d Kavanagh says.<\/p>\n \u201cThe way that loved ones take on special importance, however, is due to oxytocin combining with dopamine, a chemical that our brain releases during romantic love.\u201d<\/p>\n The next research stage involves investigating differences between men and women in their approach to love, and a worldwide survey identifying four different types of romantic lovers.<\/p>\n \u00a0<\/p>\n And ASX health stocks are feeling a little loved up this week. At\u00a0 12.55pm (AEDT) Friday the S&P ASX 200 healthcare index (ASX:XHJ) was up 1% for the week, while the benchmark S&P ASX 200 (ASX:XJO) was flat for the same period.<\/p>\n \u201cThe broader market is still up and down with whether interest rates have peaked or not but as far as we\u2019re concerned the healthcare market is looking good coming off some much lower share prices last year,\u201d Power says.<\/p>\n \u201cIn terms of procedure volumes, getting wage inflation under control in the hospital systems \u2013 that all seems to be normalising now which is good.<\/p>\n \u201cWhat is very exciting is the smaller end of the market and a really good example is the announcements by Avita Medical (ASX:AVH)<\/strong><\/a>.\u201d<\/span><\/p>\n \u00a0<\/p>\n One of Morgan\u2019s key healthcare picks for 2024, regenerative medicine company AVH has risen 15.7% this week following some significant announcements. <\/span><\/p>\n AVH has provided preliminary FY23 financial highlights with commercial revenue for Q4 expected to be US$14.1 million and FY23 revenue of US$49.8 million, up 46% on pcp, and in line with its revised guidance of US$49.5-50.5 million.<\/p>\n Gross margin for the full year is expected to be 84.5% in line with guidance of 83-85%, while\u00a0guidance for Q1 FY24 of $14.8-$15.6 million is up 42-50%.<\/span><\/p>\n Power says FY24 guidance of $78.5-84.5 million, up 57-69%, compares to its forecast of $70.2m with Factset consensus $77.4 million. Cash as at December 31 was $89.1 million.<\/p>\n AVH also provided an update on its TONE post-market study for Vitiligo, which started in July 2023, to evaluate repigmentation and understand the impact of repigmentation on improving quality of life for patients with this disease.<\/p>\n The company says it has completed enrolment with 109 patients at investigational sites across the US earlier than anticipated. Patients will be followed for a 12-month period, with the primary follow-up period being six months after treatment.<\/p>\n Furthermore, AVH has announced that it has entered into a distribution agreement with Stedical Scientific to commercialise PermeaDerm Biosynthetic Wound Matrix in the US.<\/p>\n The product is already FDA approved for use in a variety of wound types and complementary to AVH\u2019s RECELL device. The initial agreement is five years and is expected to have gross margins of 50% of the average sale price.<\/p>\n \u201cWith the exception of the slight downgrade to revenue guidance back in November, AVH has consistently achieved its set guidance and hit key milestones,\u201d Morgans healthcare analyst Emily Porter wrote in her latest client note.<\/p>\n \u201cThe company is well positioned to grow given its recent expansion into full thickness skin defects, which represents ~10x the opportunity of the existing burns market.<\/p>\n \u201cWe view the FY24 revenue guidance of 57-69% growth yoy as impressive.\u201d<\/p>\n Morgans healthcare maintains an Add rating on AVH and has lifted its 12-month target price from $5.90 to $6.40.<\/p>\n \u00a0<\/p>\n Power says Brisbane-based medical software technology company ImpediMed (ASX:IPD)<\/strong><\/a> will be among healthcare names to watch when their latest quarterly report comes out at the end of January.<\/p>\n The company will be looking to put a board stoush behind them in 2024 with new leadership including the appointment of interim CEO\u00a0 Dr Parmjot Bains.<\/p>\n \u201cIt will be the opportunity for the new CEO to introduce herself to the market and explain what the strategy is moving forward,\u201d Power says.<\/p>\n Soft tissue repair company Aroa Biosurgery (ASX:ARX)<\/strong><\/a> is also due to release what Power believes \u201cwill be a solid third quarter result\u201d.<\/p>\n \u201cIt will underpin our belief that the second half of FY24 will be strong and profitable for them,\u201d Power says.<\/p>\n He says health imaging stock Mach7 Technologies (ASX:M7T)<\/strong><\/a>\u00a0 is also due to report its quarterly result at the end of January.<\/p>\n \u201cThat will be a nice guide for us in terms of how their full year is looking,\u201d Power says.<\/p>\n \u00a0<\/p>\n Power says interest continues to grow in the merger of pharmaceutical distributor and Amcal owner Sigma Healthcare (ASX:SIG)<\/strong><\/a> with Chemist Warehouse.<\/p>\n SIG announced in December it has entered into a merger implementation agreement (MIA) to merge with CW Group Holdings Limited (CWG or Chemist Warehouse Group).<\/p>\n The company will acquire Chemist Warehouse through a cash-and-scrip deal with CWG shareholders receiving $700 million in cash combined with SIG shares, leading to their ownership of 85.75% of the merged entity (MergeCo), pending various approvals, including that from the competition regulator ACCC.<\/p>\n SIG shareholders will hold the remaining 14.25% in the reverse listing deal.\u00a0The indicative MergeCo market capitalisation will be more than $8.8 billion and is expected to\u00a0 sit well within the S&P ASX200 following quarterly re-balancing.<\/p>\n \u201cThe next couple of months we should get some sort of update on how that proposed merger is going,\u201d Power says.<\/p>\n \u201cOur suggestion to our client base was to start taking a part position in Sigma until we can get some more information on how that merger is progressing.<\/p>\n \u201cStart building a position because we think if the merger ultimately happens and is successful then that combined business will be very strong and a powerful group going forward.\u201d<\/p>\n \u00a0<\/p>\n \ufeff<\/span><\/span><\/span> Percheron Therapeutics (ASX:PER), which was formerly Antisense Therapeutics (ASX:ANP)<\/strong><\/a> is Power\u2019s pick of the week as globally there remains a lot of interest in rare diseases.<\/p>\n \u201cIt\u2019s another trend we\u2019re looking at and we\u2019ve seen the success of Neuren Pharmaceuticals (ASX:NEU)<\/strong><\/a>,\u201d Power says.<\/p>\n \u201cThe question becomes for investors who else is out there in that rare disease space and the one we have formal research on is Percheron Therapeutics.\u201d<\/p>\n PER\u2019s lead program is ATL1102, an antisense inhibitor of the CD49d receptor, which is targeting Duchenne Muscular Dystrophy (DMD).<\/p>\n \u201cWithin the next couple of months we expect recruitment to complete for their pivotal trial and top line results should read out later in the year,\u201d Power says.<\/p>\n He says this week the JP Morgan Healthcare<\/a> conference was being held in San Fransisco with rare diseases one of the main themes.<\/p>\n \u201cThere\u2019s been a huge amount of news flow coming out of that conference with global companies giving updates and we\u2019ve seen interest in the radiopharmaceutical sector and rare diseases.\u201d<\/p>\n \u00a0<\/p>\n \ufeff<\/span><\/span><\/span><\/p>\n \u00a0<\/p>\n Disclosure: The author held shares in Mach 7 Technologies at the time of writing this article.<\/em><\/p>\n The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead. Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.<\/em><\/p>\n <\/span><\/p>\n The post ScoPo\u2019s Powerplays: ASX health stocks feeling the love as Avita Medical kicks off 2024 strongly<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"To markets\u2026.<\/h2>\n
Avita Medical hits FY23 guidance set up for strong year<\/h2>\n
Quarterly reports around the corner<\/h2>\n
Interest builds in Chemist Warehouse<\/h2>\n
The AVH, IPD, ARX, M7T & SIG share price today:<\/h2>\n\n
\n\u00a0<\/p>\nScoPo\u2019s Powerplay \u2013 Percheron as interest remains in rare diseases<\/h2>\n
The PER share price today:<\/h2>\n\n