The ASX Healthcare Sector Faces a Tough Year
The ASX healthcare sector has experienced a severe downturn this year, with the ASX 200 Health Care Index (ASX: XHJ) being the worst-performing sector. This decline has been driven by several macroeconomic factors, including a weaker US dollar, rising inflation, and higher cost-of-living expenses. Additionally, regulatory uncertainty has contributed to the sector’s struggles. As of now, the ASX 200 Health Care Index is down approximately 34% for the year to date and 47% lower than it was 12 months ago.
In contrast, the broader S&P/ASX 200 Index (ASX: XJO) remains largely flat for the year to date and is 3% higher than it was at this time last year. While these sector-wide declines may seem concerning, they could present an opportunity for investors looking to buy into ASX healthcare shares at discounted prices.
Three ASX Healthcare Stocks Worth Considering
Despite the challenges, there are still some promising ASX healthcare stocks that could be worth considering for long-term investment. Here are three companies that might be on sale and could offer strong returns in the future:
ResMed Inc (ASX: RMD)
ResMed shares have fallen to a two-year low and are currently down 28% for the year so far. The global leader in sleep health was affected by the general sector-wide sell-off. However, the company’s recent third-quarter earnings update came in softer than expected, which hasn’t helped investor sentiment. Despite this, I believe that ResMed is now oversold and trading below fair value. Sleep disorders require long-term management, and as a global leader, ResMed holds a strong position in a growing market. According to Market Index data, brokers have a strong buy consensus on ResMed shares, with an average target price of $43.38, representing a potential 67% upside.
Fisher & Paykel Healthcare Corporation Ltd (ASX: FPH)
Fisher & Paykel shares have rebounded around 14% since hitting a two-year low in mid-May, but they are still down around 6% for the year to date and 11% lower than 12 months ago. Investors have been buying this medical device company’s shares following its strong FY26 results, which showed the business is stable. The company reported a 14% increase in total operating revenue and a 24% increase in NPAT. Brokers rate the shares as a strong buy, with an average target price of $36.90, indicating a potential 21% upside.
Pro Medicus Ltd (ASX: PME)
Pro Medicus shares have rebounded around 21% since the company announced a new contract win. In late May, the health imaging technology company confirmed a five-year, A$28 million contract renewal with Allegheny Health Network (AHN). This has helped recoup some losses, but the shares are still down around 28% for the year to date and 43% below their trading price from this time last year. The company’s US subsidiary also won two $40 million five-year contract renewals earlier this year. Most brokers rate the shares as a strong buy, with an average target price of $188.51, suggesting an 18% upside.
Final Thoughts
While the ASX healthcare sector has faced significant challenges this year, it’s important to look beyond the current downturn and consider the long-term potential of these companies. With the right strategy, investors may find opportunities to purchase quality healthcare stocks at attractive prices. As always, it’s essential to conduct thorough research and consult with a financial advisor before making any investment decisions.
