CSL\u2019s bloodbath scared the ASX healthcare sector this week. Pic: Getty Images <\/p>\n
ASX health sector drops 8.2% over past five days as heavy CSL fall weighs on market\u00a0\u00a0
\nSomnomed Q1 FY26 revenue up 13.5% on pcp to $28.7 million with full-year guidance\u00a0 reconfirmed
\nEpiminder targeting an ASX listing in December after a $125 million raise this week<\/p>\n
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Morgans healthcare and life sciences expert Scott Power is away this week so his colleague Iain Wilkie steps in to explain what the movers and shakers have been doing in health, and gives his ASX Powerplay. <\/p>\n
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The ASX healthcare sector has felt the fallout of the latest selloff in the sector\u2019s largest stock CSL (ASX:CSL) <\/a>this week after its shares tumbled more than 15% on Tuesday after management trimmed guidance at its AGM<\/a>.<\/p>\n At lunchtime on Friday the ASX Health Care Index (ASX:XHJ) was down 8.2% for the past five days, while the benchmark S&P\/ASX 200 (ASX:XJO) fell 1.6% across the same period.<\/p>\n \u201cCSL\u2019s latest fall earlier in the week certainly dragged the index lower,\u201d Wilkie said.<\/p>\n CSL revenue growth in FY26 is now expected to be 2-3%, compared with the 4-5% guided to at release of the company\u2019s FY25 full-year results. Net profit growth expectations have been trimmed to 4-7%, down from a forecast of 7-10%.<\/p>\n CSL management attributed the downgrade to weaker vaccine demand in the US and Chinese government cost containment affecting albumin demand.<\/p>\n The blood products giant has also shelved plans to spin off its vaccine division Seqirus into a separate ASX entity, which it flagged in its FY25 results.<\/p>\n Released on August 19, those results were met with CSL\u2019s biggest ever daily fall of ~17%<\/a> as investors reacted to announcement of the Seqirus demerger, a softer than expected FY26 outlook (now even softer) and cuts to its workforce of 15%.<\/p>\n CSL will hold a Capital Markets Day in the US from November 4\u20136, 2025, to provide further details on its strategy, which may be crucial to restoring investor confidence.<\/p>\n \u201cAlthough it remains challenging to know when US influenza vaccination rates will stabilise, we believe the risk of a permanently lower base is being over-priced, with Seqirus and Vifor marked down, with even Behring trading below peers and well under its long-term average, which we see as unjustified,\u201d Morgans\u2019 Derek Jellinek wrote in a note to clients.<\/p>\n Vifor is the company\u2019s iron deficiency and kidney care business with Behring focused on rare and serious diseases such as bleeding and immune disorders.<\/p>\n Morgans maintains a buy rating on CSL but has cut its 12-month target price to $249.51 from $293 per share.<\/p>\n Wilkie said he doesn\u2019t believe CSL is fundamentally broken, adding that the stock\u2019s ~37% year-to-date decline could present a buying opportunity \u2013\u00a0 though investors will need patience.<\/p>\n \u201cCSL is the cornerstone of defensive growth as a portfolio holding,\u201d he said.<\/p>\n \u201cThe Seqirus softness and China headwinds are weighing near term but CSL Vifor and CSL Behring are intact.\u201d<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Could Pro Medicus be a buy?<\/p>\n Down about 15% in the past month, Wilkie said it might be time for medical imaging software and services provider\u00a0Pro Medicus (ASX:PME)<\/a> to move back on the radar of investors.<\/p>\n \u201cUltimately,\u00a0I\u00a0rate\u00a0Pro Medicus as the best company on the ASX, \u201cWilkie said.<\/p>\n \u201cIt\u2019s just a matter of what price you pay for it.\u201d<\/p>\n Morgans currently has a hold on Pro Medicus with a 12-month target price of $290 per share, but Wilkie said at ~$260 it\u2019s back in the ballpark to begin considering accumulating positions.<\/p>\n \u201cYou wouldn\u2019t back the truck up at $260 but you\u2019d certainly have a look at it,\u201d Wilkie said.\u00a0<\/p>\n \u201cWith these ultra-high valuation companies like Pro Medicus, momentum can continue for a while, so when they start to run in either direction, sometimes the best course of action is to wait and see where it settles.\u00a0<\/p>\n \u201cA couple of months ago Pro Medicus went from $300 to $170 in the blink of an eye and then back up again.\u201d<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Somnomed provides positive quarterly update<\/p>\n Provider of oral appliance treatments for sleep-related breathing disorders and obstructive sleep apnea (OSA), Somnomed (ASX:SOM)<\/a> delivered Q1 FY26 revenue of $28.7 million, up 13.5% on the previous corresponding period (7.0% in constant currency).<\/p>\n Growth was driven by strong performances in Europe and North America, which recorded revenue increases of 17.1% and 12.4% respectively, while APAC dipped 4.6%.<\/p>\n Somnomed said unit sales exceeded those of Q1 FY25 \u2013 a period boosted by the clearing of a prior-year backlog \u2013 highlighting continued growth momentum.<\/p>\n The company ended the quarter with a $16.5m cash balance and reaffirmed its FY26 guidance, targeting revenue of $119\u2013$126m, EBITDA of $10\u2013$12m, and capex of $6\u2013$8m.<\/p>\n Somnomed also confirmed the Clayton Sleep Institute as the first US site for its Rest Assure clinical efficacy study, with a second major US clinic expected to be announced in the coming weeks.<\/p>\n Rest Assure is SomnoMed\u2019s next-generation connected oral appliance that monitors sleep therapy to improve patient outcomes and clinician insights.<\/p>\n \u201cIt\u2019s trying to bridge the gap with CPAP, which does have a lot of data, and they\u2019re now running a pivotal trial,\u201d Wilkie said.<\/p>\n \u201cSomnoMed is already a global leader in the dental appliance market for sleep apnoea, and this will really set them apart if they secure FDA approval.\u201d<\/p>\n Morgans has a speculative buy on Somnomed and 12-month target price of 99 cents per share.<\/p>\n \u201cTheir guidance is looking pretty comfortable at this point and hopefully the second quarter, which is one of the stronger quarters,\u00a0 goes well and we\u2019ll get a guidance upgrade in the February half year result,\u201d Wilkie said.<\/p>\n