The Australian dollar has continued its recent sell off, reaching a new five-month low against the greenback. After peaking at US81.25 cents in September, the Aussie dollar has sunk to a low of US75.36 cents on Friday's session before recovering to currently sit at around US75.50 cents.
Currency speculators have also reduced their long positions with the number of net non commercial positions making 4-month lows per last week's Commitments of Traders report.
With that in mind, here are two healthcare stocks that derive a significant amount of revenue offshore in US dollars and will benefit from a lower Australian dollar.
Cochlear Limited (ASX: COH)
Medical device company Cochlear saw an 18% increase in net profit to $224 million in FY17 on the back of strong demand for its hearing implant devices. It has guided for FY18 profit to be between $240 million to $250 million on a weighted average AUD/USD exchange rate of 80 cents.
The company stands to benefit from the ageing population as the incidence of hearing loss increases in seniors (over 65s). Cochlear is also investing heavily for the future with a $50 million state of the art manufacturing facility to be built in China which is expected to increase the company's capacity for global implant production by 50%.
The company recently released the Nucleus 7 Sound Processor in September, which is designed for Apple products and is predicted to sell strongly over the next several years. The new Nucleus processor is lighter, smaller and provides a longer battery life than the previous version.
CSL Limited (ASX: CSL)
Biotechnology company CSL posted a 24% rise in net profit at constant currency of $US1,337 million in FY17 due to strong demand for its immunoglobulin and specialty products.
The company is embarking on a large capex program in FY18 aimed at enlarging its fractionation capacity, growing the number of its collection centres and increasing manufacturing capacity for specialty products such as Haegarda and Berinert.
CSL's entrance into China via its acquisition of a majority stake in Chinese plasma fractionator Ruide should also boost earnings over the long term with the Chinese immunoglobulin market the fastest growing market in the world, with an expected shortage in supply predicted over the next 10 years. The company reaffirmed its FY 2018 guidance at its recent AGM with net profit expected to rise between 11% to 16% at constant currency to between US$1,480-$1,550 million.
