Latest news with #MorgansFinancial
News.com.au
a day ago
- Business
- News.com.au
Scott Power: ASX stocks fall as investors hear mixed news from Cochlear
ASX heath sector falls 1.1% over past five days, while broader markets flat as Middle East tensions flare Cochlear downgrades full-year profit expectations but launches a world first Monash IVF head Michael Knaap resigns after another embryo mix-up Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 27 years, gives his take on the ASX healthcare sector for the week and his 'Powerplay' stock pick. It was a big week of news for the ASX healthcare sector with the bourse's fourth largest biotech Cochlear (ASX:COH) downgrading its FY25 net earnings ~4% to $390-400 million, compared with prior guidance in February of $410-430m, on "slower-than-expected sales growth over the last few months". Morgans' healthcare analyst Derek Jellinek wrote in a note to clients consensus for the hearing tech company sat at $411m with Morgans at $412m. While Cochlear continues to expect implant units to grow ~10% in FY25, growth will be weighted to emerging markets as developed market growth has been impacted by slower-than expected market growth and a "small loss" of market share in a few countries. Cochlear now expects services revenue to decline by low double-digits compared to prior expectations for a single-digit decline. "COH believes ongoing work to identify and connect with recipients who could benefit from the latest sound processing technology, combined with the introduction of the new off-the-ear Nucleus Kanso 3 sound processor, which is expected to launch in EU and APAC mid-Jun-25, should lift services revenue in FY26," Jellinek wrote. Following a disappointing H1 FY25 result, Morgans highlighted risks in the services segment (around 25% of sales), driven by slower-than-expected uptake of the Nucleus 8 sound processor, which was launched in FY23, and cost-of-living pressures delaying device replacements. But in some positive news, Cochlear also announced the launch of Nucleus Nexa, the world's first and only smart cochlear implant system, saying it was the "outcome of a 20 year investment in R&D". "A couple of key features include upgraded firmwear, the smallest sound processor and internal memory so that has actually countered the profit downgrade they've announced," Power said. Morgans has a hold rating on Cochlear with a 12-month target price of $285.55. Monash chief quits following another embryo mixup A new acting CEO has been appointed to steer the troubled Monash IVF Group (ASX:MVF), which fell ~27% on Tuesday after reporting another embryo implant bungle. Monash announced on Thursday CEO and managing director Michael Knaap had resigned with CFO and company secretary Malik Jainudeen appointed acting CEO. In the latest incident a patient's own embryo was mistakenly transferred to them, rather than their partner's embryo as specified in the treatment plan at Monash's Clayton laboratory in Melbourne on June 5. Monash said it was conducting an internal investigation to determine the cause of the incident and notified the relevant assisted reproductive technology (ART) regulators, the Victorian health regulator and its insurers. It comes after Monash revealed in April a woman had given birth to a baby that was not hers after receiving the wrong embryo at a Brisbane clinic. An independent review by Fiona McLeod AO SC regarding that incident is currently ongoing and has been extended, with the findings yet to be disclosed. Monash confirmed that its updated profit guidance, issued on May 20, remains unchanged, projecting an underlying NPAT of $27.5 million. Morgans maintains a speculative buy on Monash with a 12-month target price of $1. Israel strikes on Iran add to market uncertainty At 1.45pm on Friday the S&P/ASX 200 Health Care index was down 1.1% for the past five days, while the benchmark ASX 200 was flat for the same period. Markets took a tumble on Friday after reports of Israel strikes against Iran's nuclear sites with the Middle East bracing for retaliation. Power said the escalating conflict adds further complexity to global equity markets still very much being driven by macroeconomic factors and geopolitical tensions. "Markets are still very much broader macro driven including with US President Donald Trump's trade and regulatory policies," Power said. "Investors will now be closely monitoring the escalating tensions in the Middle East." Power's Powerplay: EBR completes raise, starts US rollout EBR Systems (ASX:EBR) is Power's stock of the week after announcing completion of a share purchase plan (SPP) and that the first US commercial patients have been implanted with its WiSE CRT System, the world's only wireless solution for pacing the left side of the heart. The procedures took place at St David's Medical Centre and the Cleveland Clinic, two of several leading US institutions participating in this pilot release of the WiSE CRT System, which was approved by the FDA in April. EBR said the cases represented two of the main indications for WiSE. "Clearly, the first commercial patients implanted with WiSE is a key milestone, as EBR has officially transitioned from a pure R&D focus to a commercial entity," Jellinek wrote in a note to clients. He said importantly, the implants were done in advance of reimbursement and the limited market release of WiSE, which remained on track for October, showcasing the unmet medical need in the initial US$3.6m total addressable market and belief in use of the device. "As this device is a novel treatment option requiring physician education, we view the LMR, targeting key heart failure centres in the US, as an appropriate strategic way to build familiarity and experience, prior to full market release," he wrote. "We see sales surpassing US$80m into CY29. "While certainly not a 'hockey stick', we believe it is a methodical, stage-gated rollout to build strong physician support and closely monitor clinical outcomes, helping to pique interest from any would-be suitor." The company also announced today it had finished its SPP raising $xxm and adding to a fully underwritten Institutional Placement raising $55.9m completed in May. Proceeds from the capital raise will be used to advance its US commercialisation strategy for WiSE. Morgans has a buy rating and 12-month target price of $2.86. Two positive studies for Avita Wounds management company Avita Medical (ASX:AVH) has announced the first clinical publication of its Cohealyx product, which is a collagen-based dermal matrix, in the Journal of Surgery. The publication includes two positive case reports on patients with complex hand wounds treated with Cohealyx. In both instances, the patients sustained full-thickness burns following syncopal episode (temporary loss of consciousness due to a drop in blood flow to the brain). The study showed significant acceleration of wound bed vascularisation and autograft readiness, achieving readiness within five to 10 days compared to the typical two to four weeks. "Clearly, a small sample size and this publication represents the first clinical validation of AVH's preclinical findings but it's a strong start and likely the first of many case-studies to come," Morgans' healthcare analyst Iain Wilkie wrote in a note to clients Avita also announced a new study of its flagship spray-on skin treatment Recell showed it reduced hospital stays by 36% compared to traditional skin grafts. Presented at the British Burn Association's annual meeting, the US-based study analysed outcomes for more than 6,300 patients treated with Recell between 2019 and 2024. All patients had burns covering less than 30% of their total body surface area. The findings showed Recell patients spent on average 6.2 fewer days in hospital, delivering an estimated $300m in healthcare savings over the five-year period. Wilkie wrote that the share price had continued to remain weak following series of missed guidance expectations and dwindling cash reserves. "The point with Avita is they've expanded their product range to treat more of the wound complex and what the market is concerned about is do they need to raise additional funds," Power said. "They've told the market they can see a pathway through to profitability or breakeven by the fourth quarter of this calendar year so as each quarter rolls on we will get more confident that they're able to achieve that." Morgans has a speculative buy rating on Avita and 12-month target price of $3.76. Imricor gets CE Mark for NorthStar Mapping System Imricor Medical Systems (ASX:IMR) has received CE mark (European) certification for its NorthStar Mapping system under the new, more stringent European Union Medical Device Regulations (MDR). NorthStar has been approved as a Class IIa medical device with the certification received ahead of schedule. Imricor is advancing technology for real-time interventional cardiac magnetic resonance (iCMR) ablations, enabling cardiac ablation procedures to be guided by live MRI imaging instead of traditional x-ray fluoroscopy. NorthStar is a key component of its product offering. The certifications follows on from recent European approvals received for its Advantage-MR EP Recorder/Stimulator (Advantage-MR), and its second generation Vision-MR Ablation Catheter. "Imricor will now phase out first generation products approved under the old EU regulations, replacing them with new MDR approved devices," Power said. "We expect sales momentum to steadily build over coming quarters." Power said next catalysts to watch for include additional sales orders in Europe and Middle East and US FDA approval for NorthStar. Imricor is also undertaking its Vision-MR Ablation of Atrial Flutter (VISABL-AFL) pivotal clinical trial to support FDA approval of its products, which it hopes to achieve in 2025. In Europe, where Imricor has already received regulatory approval for atrial flutter, the company has started a pivotal VISABL-VT clinical trial for its second indication, ventricular tachycardia (VT). Morgans has a speculative buy on Monash and 12-month $2.28 target price. The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead. Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.
News.com.au
09-05-2025
- Business
- News.com.au
Scott Power: ASX health stocks fall but quarterly reporting was ‘overall positive'
ASX heath sector falls 1.3%, trailing ASX 200 up 1.1% as macro picture remains uncertain but 'little bit better' Soft-tissue repair company Aroa Biosurgery reconfirms FY25 reported revenue guidance of NZ$81-84 million Medical imaging softer solutions Mach7 Technologies delivers 'mixed' quarterly result ahead of leadership change Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 27 years, gives his take on the ASX healthcare sector for the week and his 'Powerplay' stock pick. At 3pm on Friday, the S&P/ASX 200 Health Care index was down 1.4% for the past five days, while the benchmark ASX 200 was up 1.1% for the same period as Power said "the macro picture remains still quite uncertain but a little bit better". "We've got the federal election out of the way, which provides some certainty now," he said. "The issues remain the same, growth is slowing, consumers are tightening their belts a bit with cost of living still at the forefront of a lot of people's minds." Power said focus will now be on the Reserve Bank of Australia when it meets on May 20 to see if Australia's central bank cuts the cash rate from 4.10%. "If they lower rates, it will reflect progress in controlling inflation but a slowing economy," he said. "They'll want to bring interest rates down to keep growth at a sustainable level." Quarterlies overall positive as Aroa reconfirms FY25 guidance Power said the latest quarterly results season has been "overall positive", with most of the companies under Morgans coverage "hitting expectations". New-Zealand-based soft-tissue repair company Aroa Biosurgery (ASX:ARX) posted its Q4 FY25 results, reconfirming FY25 guidance for reported revenue in the range of NZ$81-84 million – Morgans forecast NZ$81.1m – and normalised EBITDA of NZ$2-4m with Morgans forecast is NZ$2.8m. "Probably the most important one was Aroa," Power said. "Given they had a couple of downgrades during the year, it was important to see them reconfirm guidance for FY25." Aroa reported cash receipts for Q4 FY25 were NZ$20.1m, up from NZ$18m on the previous corresponding period (pcp). Myriad sales were up 32% on pcp, and Ovtiex sales, via Aroa's US partner TelaBio, were up 17% on pcp. During the quarter Myriad Matrix and Myriad Morcells were assigned permanent unique Level II Healthcare Common Procedure Coding System (HCPCS) codes by the Centers for Medicare & Medicaid Services (CMS) in the US. The body of peer review clinical evidence continues to grow with more than 100 studies published to validate Aroa's extracellular matrix (ECM) platform which helps improve clinician adoption. "Management also believes the 10% US tariff on imported goods from New Zealand would likely be offset to some extent by its other commercial arrangements which makes sense to us," Power said. He said compared with its ASX peers Aroa was trading at attractive levels. "Also, recent international merger and acquisition activity in the wound care space supports a higher valuation for ARX," he noted. "We expect ARX will grow its revenue on average by 20%+ pa for the next three years, driven mainly by its Myriad product." Morgans has revised its recommendation to speculative buy for Aroa and maintains a 12-month target price of 93 cents. With a March financial year-end Aroa will report its full year results on May 27. Mach7 delivers mixed result ahead of leadership change Morgans healthcare analyst Iain Wilkie has described the Q3 FY25 results of specialist in medical imaging software solutions Mach7 Technologies (ASX:M7T) as "mixed" with a small net decline in contracted annual recurring revenue (CARR) offset by stronger positive operating cashflow. "Performance YTD has been fair but relatively subdued following delays to the Veterans Affairs (VA) contract and only one new material contract," Wilkie wrote in a note to clients. "We continue to view new contract growth as more a function of timing (long-lead time) versus demand. Wilkie wrote Mach7's baseline business continues to perform well, however, has been poised for several years to break into profitability which "frustratingly hasn't quite materialised". However, Wilkie believes Mach7 remains compelling given its low valuation, strong industry tailwinds, and highly rated product. "A modicum of success we view as likely to yield a material shift in sentiment," Wilkie wrote. Mach7 started an on-market share buy-back in March purchasing $1.2m worth of stock to date. Former head of NZ-based breast imaging software company Volpara Technologies Teri Thomas has been appointed managing director and CEO, starting on July 1. Volpara was last year was taken over by South Korea's Lunit for ~$200m. "Again, Mach7 is one of those companies on the verge of building a sustainable, profitable business, which the market is looking for and their contract pipeline has been growing but perhaps not at the pace we would have liked but sustainable profit is in sight," Power said. Morgans maintains an add rating and 12-month target price of $1.37 on Mach7. Power's Powerplay: EBR applies for key reimbursement EBR Systems (ASX:EBR) has applied to the US Centers for Medicare & Medicaid Services (CMS) for the Transitional Pass-Through (TPT) reimbursement scheme for the WISE CRT System for outpatients. The application follows US Food & Drug Administration (FDA) approval of WiSE, the world's first and only wireless solution for pacing the left side of the heart. Morgans' healthcare analyst Derek Jellinek wrote in a note to clients that the TPT program was designed to provide additional reimbursement for certain new or innovative medical devices, drugs, and biologicals that do not have an established payment rate. He said the aim was to encourage the adoption of innovative technologies by ensuring that hospitals are adequately compensated during the initial period (from 2-3 years) when these products are introduced into the market. CMS has already proposed approval of the WiSE for new technology add-on payment (NTAP) reimbursement to treat inpatients beginning October 1, 2025. TPT reimbursement for WiSE is expected to be effective from the same date. "We believe submission for TPT reimbursement is yet another key milestone," Jellinek wrote. "Not only does it underpin a critical value proposition to support adoption of WiSE for outpatients, but when combined with the proposed approval of NTAP reimbursement to treat inpatients, should help to broaden patient access while lowering barriers to accelerate market acceptance." Morgans has a speculative buy on EBR and 12-month target price of $2.86. "Following FDA approval the EBR share price has actually fallen, with a fair amount of expectation built in and we were a little surprised at how deep the retracement has been," Power said. "Having said that, EBR are in a good position for a targeted launch of WiSE and will be very specific in getting the products in the right hands and ensuring the doctors are properly trained and early sales are successful." Early days in strategic realignment for MicroX Adelaide-based cold cathode X-ray machine developer Micro-X (ASX:MX1) raised $4m during Q3 FY25 and a further $2.4m from strategic partner Billion Prima, a Malaysian security technology company. Additionally, Micro-X entered a development agreement with Billion Prima for $3.2m to commercialise a baggage and parcel scanning unit over the next 12 months. The agreement together with cash receipts from customers and other project work resulted in a cash balance of $5.1m as of March 31, 2025. Micro-X has realigned its business to focus on medical imaging, deprioritising security and defence. "The realignment makes sense and the business is funded to execute on the strategy," Power said. "It's early days in the realignment and customer receipts from imaging are still modest, although a major US hospital is evaluating the Rover+ mobile x-ray unit which could result in material sales over time. "The share price has come under a lot of pressure like so many of these microcaps over the last 24 months and it's important they start delivering in terms of getting some big sales orders for their mobile x-ray device and make progress on their contracted projects, which they will see money for when hitting milestones." Morgans maintain a speculative buy recommendation and 12-month target price of 17 cents for Micro-X. Morgans upgrades PolyNovo after Macquarie conference Morgans upgraded wound-care company PolyNovo (ASX:PNV) from a hold to a speculative buy and its 12-month target price from $1.37 to $1.69, after the company's presentation at this week's Macquarie Australia Conference. PolyNovo highlighted that strong growth was returning with consensus having revenue at ~20% for next three years. "The company highlighted a record month in March with total sales of $11.9 million , up 71% on pcp and with sales of $84.4m, up 31.1% for nine months," Power said. Pharmaceutical distributor Sigma Healthcare (ASX:SIG), which completed its merger with discount pharmacy chain Chemist Warehouse in February, also reported strong growth at the conference and in an ASX trading update. Sigma reported normalised EBIT growth for the group of ~36% for nine months YTD was consistent with Chemist Warehouse Group's H1 FY25 growth. "The Chemist Warehouse and Sigma merger is all coming together and they have provided enough information that the business is tracking well," Power said. Morgans has an add rating on Sigma with a 12-month share price of $3.12. The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead. Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article. At Stockhead, we tell it like it is. While EBR Systems is a Stockhead advertiser, the company did not sponsor this article.
