In a recent research note, Macquarie Group Ltd (ASX: MQG) has highlighted three small-cap healthcare stocks on the Australian Securities Exchange (ASX) with the potential for substantial gains. The broker forecasts these stocks could rise by up to 130% over the next year, offering a promising opportunity for investors seeking high-growth potential in a volatile market.
Small-cap stocks, defined by a market capitalization of less than $2 billion, are often seen as riskier investments compared to their large-cap counterparts. However, their smaller size allows for more rapid growth, making them attractive to investors looking for significant returns.
Healius Ltd: A Potential Turnaround
Healius Ltd (ASX: HLS), a provider of specialty diagnostic services in Australia, is one of the companies identified by Macquarie. Despite a challenging five-year period that saw its shares decline by 74%, the broker is optimistic about a turnaround. Macquarie’s analysis focuses on the company’s base business trends, cost growth, margins, and progress on its T27 strategy.
Currently, Healius shares are trading at $0.77, with Macquarie setting a price target of $1.20. This represents a potential upside of 56% over the next 12 months.
“Healius has the potential to rebound significantly as it implements strategic changes and capitalizes on its diagnostic services,” Macquarie notes.
Monash IVF: Oversold and Undervalued
Monash IVF (ASX: MVF), Australia’s second-largest IVF provider, has also caught Macquarie’s attention. The company’s shares have suffered a 40% decline this year, impacted by two unfortunate incidents. However, Macquarie believes the stock has been oversold and is poised for recovery.
Monash IVF shares have already risen 41% since hitting a 52-week low of $0.54 in April. With a current trading price of $0.76 and a price target of $1.30, the broker sees a 79% upside potential, including capital growth and dividends. The company also offers an attractive dividend yield of 6.75%.
“Monash IVF’s current valuation presents a compelling opportunity for investors, especially with its strong dividend yield,” says Macquarie.
Polynovo Ltd: Innovative Technology Driving Growth
PolyNovo Ltd (ASX: PNV) is known for its innovative medical devices using the patented NovoSorb technology, primarily for treating burns and surgical wounds. Despite a 45% drop in share value over the past five years, Macquarie sees significant upside potential.
The broker forecasts a 2H25 revenue of $71.7 million and is keenly watching the company’s upcoming results for insights into its BARDA trial and the performance of its new MTX product. With shares currently priced at $1.22 and a price target of $2.80, Polynovo could see a 130% increase over the next year.
“PolyNovo’s continued innovation and product development position it well for future growth,” Macquarie asserts.
Implications for Investors
The potential gains highlighted by Macquarie underscore the attractiveness of small-cap healthcare stocks on the ASX. While these investments carry inherent risks, the projected upsides offer a compelling case for investors willing to navigate the volatility.
According to financial analysts, the healthcare sector remains a robust area for investment, driven by technological advancements and increasing demand for medical services. The stocks identified by Macquarie could benefit from these broader industry trends, providing a strategic entry point for those looking to diversify their portfolios.
As the global economy continues to recover from recent disruptions, the focus on healthcare innovation and service expansion is likely to remain strong. Investors should stay informed about these developments and consider the potential of small-cap stocks as part of a balanced investment strategy.
Looking ahead, the performance of these stocks will depend on various factors, including market conditions, company-specific developments, and broader economic trends. Investors are advised to conduct thorough research and consider professional advice before making investment decisions.
