Overview of the ASX Healthcare Sector
The S&P/ASX 200 Index, specifically focusing on healthcare shares, has experienced a notable decline. On Tuesday, healthcare shares fell by 1.1%, and over the past 12 months, they have dropped by an impressive 36%. This downturn has been attributed to several factors, including a weaker US dollar, US tariffs, and rising labour costs. Despite these challenges, some experts believe that this market correction presents an opportunity for investors to acquire high-quality healthcare stocks at attractive prices.
Sigma Healthcare Ltd (ASX: SIG)
Sigma Healthcare Ltd currently trades at $2.75 per share, marking a 0.9% decrease on Tuesday. Over the past six months, the share price has fallen by 11%. However, it previously reached a record high of $3.28 in June 2025 following the completion of the Chemist Warehouse merger in February. The company operates as a leading wholesale distributor and retail pharmacy franchisor across Australia, New Zealand, Ireland, and the United Arab Emirates.
Morgans analyst Damien Nguyen has recommended Sigma Healthcare as a buy, citing several positive factors:
- The company maintains a solid balance sheet with conservative leverage and strong operating cash flows.
- It has the potential to widen margins through the expansion of its owned labels and exclusive products.
- Improving operating leverage is expected through supply chain efficiencies and consolidation in distribution centres.
- A softer share price offers a compelling buying opportunity for long-term focused investors.
Polynovo Ltd (ASX: PNV)
Polynovo Ltd’s share price remains steady at $1 on Tuesday, but it has lost 29% of its value over the past six months. The stock is well below its 52-week high of $1.72, which was recorded in May last year. Stuart Bromley from Medallion Financial Group has issued a buy rating on this ASX healthcare share.
Bromley highlights the following:
- Polynovo provides dermal regeneration solutions using its NovoSorb biodegradable polymer technology.
- The company’s skin repair product continues to drive revenue growth. Group sales of NovoSorb increased by 26% in the first half of fiscal year 2026 compared to the prior corresponding period.
- US sales saw a 25.3% increase during the same period.
- The company has the capacity and product offerings to meet growing demand effectively.
Pro Medicus Ltd (ASX: PME)
Pro Medicus Ltd’s share price is currently at $138.01, down 0.8% on Tuesday and 51% over the past six months. The company designs and distributes medical imaging software and services globally. Its share price hit a record high of $336 in July last year after a two-year upward trend.
Despite a significant drop of almost 60% since then, Stuart Bromley has issued a buy rating for Pro Medicus. His reasoning includes:
- The share price has declined due to concerns about artificial intelligence impacting the business.
- However, the company continues to secure large and long-term contracts. For instance, Pro Medicus recently renewed a five-year, $37 million contract with Northwestern Medicine in Chicago, featuring increased minimums and higher transaction fees.
- In his view, Pro Medicus represents a rare opportunity to invest in a world-class software company at a substantial discount.
Conclusion
While the healthcare sector faces headwinds, the current market conditions offer potential opportunities for savvy investors. Experts like Damien Nguyen and Stuart Bromley see value in companies such as Sigma Healthcare, Polynovo, and Pro Medicus. Their insights suggest that despite recent declines, these firms possess strong fundamentals and growth potential, making them attractive options for long-term investment. Investors are encouraged to carefully evaluate their portfolios and consider the strategic advantages these companies may offer.
