Since then, the index has risen by 21% in just one month, compared with a 0.7% rise in the broader S&P\/ASX 200 (ASX: XJO) index over the same period.<\/p>\n
CSL Ltd (ASX: CSL<\/a>), Cochlear Ltd (ASX: COH<\/a>), and ResMed Inc (ASX: RMD<\/a>) are all up.<\/p>\n The question is whether this recovery is real, or whether the sector has simply bounced from deeply oversold levels.<\/p>\n Image source: Getty Images<\/p>\n What drove the selloff in the first place<\/p>\n Understanding the recovery requires understanding what caused the fall.<\/p>\n Healthcare was the<\/a> worst-performing sector of all eleven ASX 200 market sectors in FY26.<\/p>\n The sector was hit by a combination of factors specific to individual companies and broader macro forces.<\/p>\n A stronger Australian dollar eroded the offshore profits of CSL, which generates most of its revenue in the United States. Rising interest rates weighed on the valuations of high-multiple growth stocks across the sector. Earnings downgrades at CSL and Cochlear removed the premium earnings trajectory the sector had traded on for years. And a rotation toward energy and resources stocks pulled capital away from healthcare regardless of individual company fundamentals.<\/p>\n CSL: the most important recovery to watch<\/p>\n CSL is up 32% since 3 June, but remains down close to 50% over the past twelve months.<\/p>\n The FY26 result, due on 19 August 2026, will be the most important test of whether the recovery has earnings support or is simply a valuation rebound.<\/p>\n Management has pointed to improving Behring division revenue in the second half of FY26 as the key catalyst.<\/p>\n Morgans retains<\/a> a buy rating on CSL with a price target of $147.59. However, the broker acknowledges that a sustained recovery in sentiment may take several quarters to fully materialise as the market waits for proof in the numbers.<\/p>\n ResMed: the most compelling valuation story<\/p>\n ResMed is up 18% since 3 June but remains at its lowest valuation in over a decade.<\/p>\n Morgans has retained<\/a> its buy rating on ResMed with a price target of $41.72. The broker noted that the stock has de-rated to just 16 times forward earnings despite the market continuing to forecast double-digit earnings per share growth.<\/p>\n Morgans points out that while GLP-1 therapy risks exist, current industry data and operational performance continue to support the long-term investment case.<\/p>\n![\"Portrait,](\"https:\/\/www.newsbeep.com\/ie\/wp-content\/uploads\/2026\/07\/health-21-16.9-1200x675.jpeg\")
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