Health sector related stocks remain a key go-to for investors and with good reason.
With the first anniversary of the initial public offering (IPO) of Australia's largest listed health insurer Medibank Private Ltd (ASX: MPL) approaching it's a good time to review the performance of not only this stock but also other companies which offer investors exposure to the thematic of increased demand and spending on health related services.
Since IPO in late November, Medibank's shares are up nearly 20% on the $2 issue price for retail investors. Meanwhile, over the same time frame shareholders in Ramsay Health Care Limited (ASX: RHC) have seen their shares rally around 14% while shares in Cochlear Limited (ASX: COH) are up 22%.
In contrast to the positive performances of these three stocks, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has slumped nearly 5% over the same period.
Here are some of the reasons these three stocks have been outperforming…
Medibank: The ex-government owned insurer reported total income growth of 3% and net profit of $285 million, which was well up on the prior year thanks to no impairments or restructuring charges. The group benefited from two sets of premium rises over the past two years which have outstripped claim cost rises.
Ramsay: The global owner and operator of private hospitals has seen a major boost to its revenues and profits thanks to the acquisition of Generale de Sante which positioned the group as the leading hospital operator in France. Revenues soared 50%, while profits jumped 27% and the final dividend was increased by around 19%.
The group also provided guidance for the current financial year of 12% to 14% profit growth.
Cochlear: The leading provider of implantable hearing devices reported a 15% rise in sales and a 56% surge in net profit to $146 million – helped largely by favourable currency movements. Cochlear was also cycling results off of a lower base in the prior period which was affected by a delay in the release of a new product.
Looking forward and for the current financial year the group is forecasting 13% to 20% profit growth.
