The ASX healthcare sector is keeping its balance during market volatility. Pic: Getty Images<\/p>\n
ASX health sector up 0.18% for the week, while broader market down 1.49% after Wall Street\u00a0
\nMorgans upgrades ratings on Clinuvel but cuts 12-month share price on Avita Medical
\nEBR\u2019s case volumes for its WiSE CRT System tripled quarter-on-quarter\u00a0<\/p>\n
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Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 27 years, gives his take on the ASX healthcare sector for the week and his \u2018Powerplay\u2019 stock pick.<\/p>\n
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The ASX healthcare sector finished the week in steady fashion, despite a sharp sell-off on Wall Street overnight on Thursday that rippled through global markets and the ASX.<\/p>\n
At 1.45pm (AEDT) on Friday the ASX Health Care Index (ASX:XHJ) was up 0.18% for the past week, while the benchmark S&P\/ASX 200 (ASX:XJO) fell 1.49%.<\/p>\n
\u201cThe sell-off was due to Investors growing more pessimistic about the interest rate outlook,\u201d Power said.\u00a0<\/p>\n
Despite the broader market sell-off, Power remains optimistic of a traditional \u201cSanta Rally\u201d into December. He said in a positive sign momentum had been building in the local healthcare IPO market.<\/p>\n
Morgans is acting as joint lead manager and underwriter for Epiminder, which focuses on diagnostic and treatment tools for epilepsy and is due to make its ASX debut on December 1.<\/p>\n
It is also a joint lead manager for the IPO of Saluda Medical, earmarked for December 5.\u00a0Saluda was founded by former Cochlear executive John Parker, a long-time medical device inventor and researcher.<\/p>\n
The company has developed a device to treat conditions such as chronic pain and movement disorders, which has secured US Food and Drug Administration (FDA) approval.<\/p>\n
\u201cThe IPO market has stepped up in the last six months or so after not much interest, which is a good sign,\u201d Power said.<\/p>\n
EBR\u2019s WiSE CRT system gains traction in US<\/p>\n
Power\u2019s pick from last week EBR Systems (ASX:EBR)<\/a>\u00a0 has reported its Q3 CY25 results, reporting case volumes for its WiSE CRT System tripled quarter-on-quarter as the company ramps up its US commercial rollout following FDA approval in April 2025<\/a>.<\/p>\n WiSE is the world\u2019s only wireless endocardial (placed within the heart) pacing system in clinical use for stimulating the heart\u2019s left ventricle.<\/p>\n Revenue rose to US$512,000, up 201% from the previous quarter, driven by nine successful WiSE implants despite limited reimbursement during the period.<\/p>\n It was paired with leadless pacemakers for four of the cases, including two with Medtronic Micra and two with Abbott Aveir, reflecting growing adoption of leadless pacing for heart failure as well as standard pacing.<\/p>\n EBR posted a net loss of US$12.2m, broadly in line with expectations, reflecting increased operating expenses tied to commercialisation activities.<\/p>\n EBR ended the quarter with US$73m in cash and short-term investments, providing more than five quarters of funding runway at its current burn rate.<\/p>\n During the quarter EBR reported growing physician engagement, with 14 new doctors trained, and 22 year-to-date, with eight new purchasing agreements signed.<\/p>\n A major highlight of the quarter was CMS approval for both NTAP and TPT reimbursement programs, completing a comprehensive Medicare pathway across inpatient and outpatient care.<\/p>\n \u201cEBR are now moving into their limited market release phase, coinciding with the start of the US Medicare reimbursement programs, so getting doctors properly trained, sales staff in place and signing up hospitals,\u201d Power said.<\/p>\n \u201cThe company is ticking all the boxes from our perspective and we think it is very well placed over the next few quarters to show material uplift in implant numbers.\u201d<\/p>\n Morgans has a buy rating on EBR and 12-month target price of $2.86.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n ReNerve lifts 70% after big US win<\/p>\n ReNerve (ASX:RNV)<\/a> was up more than 71% on Thursday after its flagship NervAlign nerve cuff was approved for use across the US Department of Defense (DoD) and Veterans Affairs (VA) healthcare systems.<\/p>\n The approval allows NervAlign to be deployed throughout the DoD\u2019s Military Health System, managed by the Defense Health Agency, which covers 51 military hospitals and 424 clinics. It can also be used across the VA\u2019s 170 medical centres and over 1,193 outpatient facilities.<\/p>\n The Military Health System provides care to active-duty personnel, their families, and retirees, while the VA operates the US\u2019 largest integrated healthcare network, serving millions of veterans. Together, these systems care for ~9.5 million patients.<\/p>\n Following the approval, ReNerve received both an initial and a repeat purchase order, reflecting early confidence in the NervAlign system.<\/p>\n \u201cReNerve is making solid progress building its portfolio of peripheral nerve which had its genius from CSIRO,\u201d Power said.<\/p>\n \u201cWe expect the company will continue to generate growing sales as surgeons see the benefits of the products.\u201d<\/p>\n \u00a0<\/p>\n \ufeff\u00a0<\/p>\n \u00a0<\/p>\n Morgans upgrades Clinuvel as sentiment falls<\/p>\n Morgans has upgraded its rating on Clinuvel Pharmaceuticals (ASX:CUV)<\/a> to\u00a0a speculative buy from a hold, maintaining its 12-month target price of $14 following the company\u2019s AGM, despite recording a third consecutive remuneration strike.<\/p>\n Clinuvel is down ~8% YTD. In a note to clients Morgans healthcare analyst Iain Wilkie wrote management remained upbeat but fell short of strongly guiding investors toward the upcoming catalysts.<\/p>\n \u201cWe view the risk\/reward profile is more attractive at these levels with just under half the market cap cash backed and steady operating cashflow generation,\u201d he wrote.<\/p>\n \u201cIt\u2019s a polarising company, which can present sound trading opportunities when sentiment is low.<\/p>\n \u201cThis would be now, with sentiment sitting bottom-of-the-barrel as ongoing strategy, competitive threats, and management\u2019s approach to capital deployment continues to limit investor demand.\u201d<\/p>\n Clinuvel recorded its third consecutive remuneration strike with shareholders voting against the adoption of the remuneration report at a rate of 39.7% in 2023,\u00a0 increasing to 52.8% in 2024 and 63% this year.<\/p>\n \u201cDespite or perhaps because of ongoing concerns around transparency, capital allocation, and disclosure, the stock is trading at historically low valuation levels (PE 14.7x vs 32.4x 5-year average, EV\/EBITDA 6.6x vs 31.3x 5-year average), which we view as attractive for a trading opportunity,\u201d Wilkie wrote.<\/p>\n Wilkie believes in the near term, its franchise for rare metabolic disorder Erythropoietic Protoporphyria (EPP) remains highly profitable and continues to generate substantial free cash flow, providing further downside support.<\/p>\n \u201cWhile competitive risk exists over the medium term, we see limited threat to cash flows in the short term and worthy of positioning CUV as a trading opportunity,\u201d he wrote.<\/p>\n Upcoming catalysts include updates on Clinuvel\u2019s vitiligo program,\u00a0 PhotoCosmetics highlighted as a future revenue stream and progress on CEO succession planning.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Morgans cuts target price of Avita Medical<\/p>\n