Goldman Sachs names Healius (ASX:HLS) as a value share to buy

The Healius Ltd (ASX:HLS) share price could still go a lot higher from here according to one leading broker…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Healius Ltd (ASX: HLS) share price was a particularly positive performer on Wednesday.

The healthcare company's shares jumped 7.5% to $3.90 following the release of a positive trading update.

What was in the Healius update?

As you might have guessed from the Healius share price reaction, the company has been performing very positively so far in FY 2021.

Healius advised that its Pathology business continued its strong revenue growth in October and November thanks to a combination of COVID-19 testing and non-COVID revenue growth.

The Imaging and Day Hospitals businesses were also performing positively, with growth being delivered across all states.

This strong form and the recent completion of its medical centres sale to BGH Capital, led to the company announcing a $200 million share buyback. This represents almost 10% of its shares outstanding.

Can the Healius share price go higher?

Although the Healius share price hit a two-year high on Wednesday, one leading broker believes it can still go higher.

According to a note out of Goldman Sachs, its analysts believe Healius' shares are great value and expect consensus earnings upgrades to drive its shares higher in the future.

The broker has a buy rating and $4.40 price target on its shares. This implies potential upside of almost 13% over the next 12 months excluding dividends.

It commented: "Prior to today, we were forecasting earnings +20-25% above consensus and, whilst we make only modest revisions to operating profits today, we post +7-22% EPS upgrades to reflect the new share buy-back program."

"Trading at 10.2x pre-AASB EBITDA (or 6.0x post-AASB) for +8% EBITDA CAGR (FY21-24E), HLS is one of the few value-oriented stocks in the ASX healthcare sector, and we believe it should be considered a core holding ahead of CY21. We expect consensus upgrades and multiple re-rating to drive further stock performance through the mid-term," it concluded.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX shares finished the trading week on a high this Friday.

Read more »

A businessman stacks building blocks.
Technology Shares

6% gain! What's up with Block shares today?

Block shares are up more than 34% since 2 May.

Read more »

Broker looking at the share price.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Share Gainers

Why ARB, Block, Mayne Pharma, and Paladin Energy shares are charging higher today

These shares are having a strong finish to the week. But why?

Read more »

A woman puts her hands up as she smashes and breaks through a glass ceiling.
Share Gainers

How these 5 ASX 200 stocks are smashing the benchmark this week

These fives ASX 200 stocks have made some very happy shareholders this week. Here’s how.

Read more »

Bored man sitting at his desk with his laptop.
Share Fallers

Why Catalyst Metals, Duratec, Nufarm, and Rio Tinto shares are dropping today

These shares are ending the week in the red. But why?

Read more »

A smiling woman at a hardware shop selects paint colours from a wall display.
Broker Notes

After its strategy day, what does Macquarie think Wesfarmers shares are worth?

Let's see what the broker is saying about this blue chip.

Read more »

Buy, hold, and sell ratings written on signs on a wooden pole.
Technology Shares

After surging 13% yesterday, are TechnologyOne shares a buy, hold or sell according to Macquarie?

Valuations matter when investing, and Macquarie feels no different.

Read more »