In a bold forecast, analysts at Macquarie Group Ltd (ASX: MQG) have identified three small-cap healthcare stocks on the Australian Securities Exchange (ASX) that could see significant gains. According to their research, these stocks are projected to rise by 56%, 79%, and 130% respectively over the next year. This prediction comes amidst a broader market environment where small-cap stocks often outperform their larger counterparts due to their higher growth potential.
Small-cap stocks, typically defined as companies with a market capitalization of less than $2 billion, have the ability to grow rapidly, making them attractive to investors seeking substantial returns. The latest research note from Macquarie highlights three companies in the healthcare sector that are poised for impressive growth: Healius Ltd, Monash IVF, and Polynovo Ltd.
Healius Ltd: A Turnaround Story
Healius Ltd (ASX: HLS) is a provider of specialty diagnostic services in Australia, operating through its Pathology, Imaging, and Other segments. Despite a challenging five-year period where its shares have plummeted by 74%, Macquarie analysts are optimistic about a potential turnaround. The upcoming financial results are expected to shed light on base business trends, cost growth, margins, and the progress of the T27 strategy.
Macquarie currently has a price target of $1.20 on Healius shares, which are currently trading at $0.77, suggesting a 56% upside over the next 12 months.
Monash IVF: Rebounding from Setbacks
Monash IVF (ASX: MVF), Australia’s second-largest IVF provider, operates 13 clinics across the country. The company has faced significant challenges this year, with its share price dropping 40% due to two unfortunate incidents. However, Macquarie analysts believe these shares have been oversold.
Since hitting a 52-week low of $0.54 in April, Monash IVF shares have rebounded by 41%. Despite this recovery, Macquarie maintains that the stock remains undervalued and has the potential for further gains.
With a current price target of $1.30, Monash IVF shares are trading at $0.76, indicating a 79% upside, including capital growth and dividends. The stock also offers an attractive dividend yield of 6.75%.
Polynovo Ltd: Innovation in Medical Devices
PolyNovo Ltd (ASX: PNV) specializes in the development and commercialization of medical devices using its patented NovoSorb technology, which is used in the treatment of burns and surgical wounds. Despite a 45% decline in share value over the past five years, Macquarie sees significant upside potential.
The broker’s forecast includes 2H25 revenue of $71.7 million, with a focus on management commentary regarding its BARDA trial and the performance of its new MTX product in upcoming results.
Macquarie has set a price target of $2.80 for Polynovo shares, currently trading at $1.22, suggesting a substantial 130% upside over the next 12 months.
Implications for Investors
The predictions by Macquarie Group highlight the potential for substantial returns in the small-cap healthcare sector on the ASX. While these stocks offer high growth potential, they also come with increased risk, making them suitable for investors with a higher risk tolerance. The anticipated gains are contingent on various factors, including market conditions and company performance.
As these companies release their financial results and provide updates on strategic initiatives, investors will be closely monitoring their progress. The healthcare sector’s ongoing innovation and demand for diagnostic and medical services further bolster the potential for these stocks to achieve the predicted gains.
For investors considering these opportunities, it is crucial to conduct thorough research and consider the broader economic environment. The ASX small-cap healthcare sector continues to present exciting possibilities for those willing to navigate its inherent volatility.
