No Christmas miracle yet for healthcare, but a few standout stocks are still scrubbing in. Pic: Getty Images<\/p>\n
Healthcare slides 1.3% for the week despite the wider market lifting 0.7%
\nImmutep surges 46% on lucrative global licensing deal with Dr. Reddy\u2019s
\nPolyNovo wins Morgans upgrade as new leadership team takes charge<\/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 has logged another week in the red and, without a Christmas miracle, looks set to end 2025 as the worst of the 11 sectors, down ~23% YTD.<\/p>\n
At 1.30pm (AEDT) on Friday the ASX Health Care Index (ASX:XHJ) was down 1.3% for the past week, while the benchmark S&P\/ASX 200 (ASX:XJO) was marginally up 0.7%.<\/p>\n
While the US Federal Reserve this week cut interest rates by a quarter point for the third time this year, it was a different narrative in Australia.<\/p>\n
Sticky inflation saw the Reserve Bank of Australia (RBA) hold the official cash rate at 3.60% at its December meeting on Tuesday, with a hawkish RBA Governor Michele Bullock even hinting at a possible hike in 2026.<\/p>\n
\u201cIt has been a pretty tough year and I have moderated and changed my views throughout the year,\u201d Power said.<\/p>\n
\u201cI was reasonably bullish from the middle of the year thinking healthcare had underperformed long enough and there would be a rotation into the sector.<\/p>\n
\u201cTo a small extent that happened in November but has retraced and the index is down around 23% for the year.\u201d<\/p>\n
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Large caps weigh on index as CSL slumps 36% YTD<\/p>\n
Power said large caps have weighed heavily on the ASX healthcare index in 2025, led by its biggest component \u2013 blood-products giant CSL (ASX:CSL)<\/a> \u2013 which is down around 36% year to date.<\/p>\n \u201cIt\u2019s had profit downgrades, a couple of missteps in terms of communicating with markets around cost-cutting and divesting their vaccine division CSL Seqirus,\u201d he said.<\/p>\n Power said other large caps have also underperformed including global pathology operator Sonic Healthcare (ASX:SHL)<\/a>\u00a0and\u00a0hearing technology player Cochlear (ASX:COH)<\/a>, down 15% and 10% respectively YTD.<\/p>\n Sleep disorder device maker ResMed (ASX:RMD)<\/a> is in the green, but up only around 3%.<\/p>\n \u201cOf the majors there have not been too many shining stars,\u201d Power said.<\/p>\n \u00a0<\/p>\n Hopes remain of a Santa rally<\/p>\n However, Power hasn\u2019t given up on a Santa rally in 2025 to revive the healthcare sector from its year-long malaise.<\/p>\n \u201cI saw some stats recently showing that the Santa rally usually kicks in by mid-December,\u201d he said.<\/p>\n \u201cIt\u2019s largely driven by people heading off on holidays, which means less trading activity \u2013 and often a bit more buying \u2013 so share prices tend to edge up over the next couple of weeks.\u201d<\/p>\n \u00a0<\/p>\n Immutep soars on lucrative partnering deal<\/p>\n Immuno-oncology drug developer\u00a0Immutep (ASX:IMM)<\/a> is up 46% for the week after announcing a lucrative commercialisation deal with Indian-based Dr. Reddy\u2019s Laboratories for eftilagimod alfa (efti).<\/p>\n Under the deal Dr. Reddy\u2019s receives exclusive rights to develop and commercialise efti in all countries outside of North America, Europe, Japan, and greater China.<\/p>\n Immutep in return will receive US$20 million (~A$30m) upfront and will be eligible to receive potential regulatory development and commercial milestone payments of up to US$349.50m (~$528.40m), plus double-digit royalties on commercial sales.<\/p>\n The company is also in line for double-digit royalties on commercial sales and will continue to hold the global manufacturing rights to efti across all markets and will supply Dr. Reddy\u2019s.<\/p>\n Efti is a first-in-class novel immunotherapy that directly activates the immune system to fight cancer, which is under evaluation in TACTI-004 (KEYNOTE-F91), a phase III trial for the first-line therapy of advanced or metastatic non-small cell lung cancer.<\/p>\n It is is also being investigated in other indications including head & neck cancer, breast cancer, and soft tissue sarcoma.<\/p>\n \u201cThat was a pretty big deal that Immutep announced with Dr.Reddy\u2019s and is providing them with important funding from an upfront payment and depending on clinical success there will be more milestone payments come through,\u201d Power said.<\/p>\n \u201cThe deal has put Immutep in a solid position and the share price has responded positively.\u201d<\/p>\n \u00a0<\/p>\n \ufeff\u00a0<\/p>\n \u00a0<\/p>\n Morgans upgrades PolyNovo after changing of the guard<\/p>\n Morgans has upgraded wound-care company PolyNovo (ASX:PNV)<\/a> following changes to its board and the appointment of new CEO Bruce Peatey, who most recently ran the US, Canadian and Latin American markets for global dental products company Dentsply Sirona, based out of the US.<\/p>\n Peatey has relocated to Melbourne and is going to be based at PolyNovo\u2019s headquarters in Port Melbourne.<\/p>\n Power said PolyNovo reported a strong Q1 FY26 result and was EBITDA positive, with group sales up 33.3% to $34.7m and total revenue of $37.6m represented by US sales up 33.4%, rest of world up 33% and NovoSorb MTX up 174.8% to $2.9m.<\/p>\n Morgans forecast FY26 revenue of $148.6m, up 16.8% and EBITDA of $16.4m.<\/p>\n The analysts have upgraded PolyNovo to a buy from a speculative buy and increased its 12-month target price to $2.03 from $1.69.<\/p>\n \u201cThat\u2019s a function of the new CEO being appointed and some board changes, which we think have created a lot more certainty for the company,\u201d Power said.<\/p>\n PolyNovo has also completed construction of a new manufacturing facility in Melbourne to expand production fivefold.<\/p>\n An additional $2.5m in capital expenditure is required for commissioning, which is forecast to be completed during H2 CY26 and funded from existing cash reserves.<\/p>\n On the clinical and regulatory front, PolyNovo is also planning to submit to the FDA\u00a0 premarket approval (PMA) for full thickness burns for NovoSorb, with approval expected in late CY26.<\/p>\n \u201cPolyNovo\u2019s NovoSorb technology has gained rapid market traction, initially in burns and extending into trauma,\u201d Power said.<\/p>\n \u201cOur discussions with surgeons imply the product is highly effective.<\/p>\n \u201cWe believe the growth trajectory both geographically and by indication will see revenue grow by approximately 20% pa for the next three years.\u201d<\/p>\n \u00a0<\/p>\n \ufeff\u00a0<\/p>\n \u00a0<\/p>\n Cogstate falls after downgrading H1 FY26 revenue guidance<\/p>\n Neuroscience tech company CogState (ASX:CGS)<\/a> has fallen this week after downgrading its H1 FY26 revenue guidance, attributed to timing related deferrals.<\/p>\n In a business update Cogstate said it now expected revenue for H1 FY26 of US$25 to $26m, which is a 5 \u2013 9% increase on the prior corresponding period (pcp), but below the previously guided 18 \u2013 20% growth.<\/p>\n In a note to clients Morgans\u2019 healthcare analyst Iain Wilkie wrote that revenue was shifting into the back half of FY26 due to timing delays in recognition, despite solid underlying sales performance.<\/p>\n \u201cThe pipeline continues to sit at record levels, with ongoing conversion across a broader range of indications, including Alzheimer\u2019s, other dementias, Parkinson\u2019s, psychiatry, schizophrenia, sleep disorders and rare diseases,\u201d he wrote.<\/p>\n However, Wilkie noted that when combining the H126 result and the H2 FY26 backlog, the implied full-year revenue was around US$47 -$48m, which is below the current consensus estimate of ~US$57.7m for FY26.<\/p>\n Margins for H1 FY26 are also expected to be lower due to reduced near-term revenue and ongoing investment in growth areas such as R&D, expansion in APAC, data engineering and AI development.<\/p>\n \u201cWhile the near-term revenue and margin outlook is softer due to timing, underlying business momentum appears strong,\u201d Wilkie wrote.<\/p>\n \u201cThe record pipeline and significant contract wins across a broader range of indications support the medium-term growth story.<\/p>\n \u201cNear-term, investors should expect a back-end loaded FY26 and given the new gap between the updated guidance and consensus, would be fair to expect consensus estimates to be revised lower.\u201d<\/p>\n \u00a0<\/p>\n \ufeff\u00a0<\/p>\n \u00a0<\/p>\n Nanosonics secures key approvals for Coris<\/p>\n