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…

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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.

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