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Key points
- The benchmark index has started the year well after a choppy period these past few months
- The team at RBC Capital Markets reckon these three ASX shares are poised to deliver upside in 2022
- Analysts at the firm recently upgraded each company to outperform in updates today
The S&P/ASX 200 Index (ASX: XJO) has started the day up and is now trading 0.24% in the green at 7,435 points.
With the new year now well underway, the team at RBC Capital Markets has tipped these 3 ASX shares to outperform in 2022. Interestingly, each company has exposure to COVID-19 testing in some way.
The broker believes this could benefit their clinical diagnostics segments. Let's take a look.
Sonic Healthcare Ltd (ASX: SHL)
Sonic Healthcare came into the new year trading down, falling from closing highs of $46.70 on 30 December.
This drop has occurred in tandem with the broader S&P/ASX 200 Health Care Index (ASX: XHJ) which has plunged almost 7% since 2022.
Hence, in the absence of any price-sensitive information from the company, weakness in the sector appears to be impacting Sonic Healthcare's share price.
Shares in the $19 billion company by market cap outperformed last year, benefitting from the earnings surprise in the company's Q1 FY22 trading update.
However, support fell away in December with government policy shifting away from Sonic's COVID-19 test offerings in favour of rapid antigen testing (RAT). This was a development analysts at Credit Suisse recently highlighted.
Despite these potential headwinds, RBC Capital Markets disagrees and is bullish on the direction of Sonic's share price.
The broker initiated coverage of Sonic Healthcare with a 'buy' today and values the company at $47 per share, implying an upside potential of 15% at the time of writing.
The team at Morgan Stanley agrees with RBC and also raised its price target by around 4% to a valuation of $48.10 today.
Healius Ltd (ASX: HLS)
Shares in healthcare player Healius also took a beating during the transition into the new year. The company's share price has plunged more than 15% since 29 December.
Healius was boosted by the demand for COVID-19 testing during the last 2 years. The company recently noted it was completing more than 40,000 tests a day. This helped it recognise a 179% year on year gain in after-tax profits.
However, as with Sonic Healthcare, new language from the government in pushing RATs is weighing on the outlook for Healius' shares.
As such, the Helius share price has come off a high of $5.52 last year and is now trading sideways so far on Tuesday. At the time of writing, it is $4.705, a gain of 0.53% on yesterday's close.
Nevertheless, the team at RBC Capital Markets has initiated coverage on the ASX share with a 'sector perform' recommendation. It values the company at $5 a share.
At the time of writing, this implies an approximate 6.2% upside potential should the broker's forecast be correct.
Analysts at fellow brokers Morgan Stanley and Jefferies concur with this sentiment. Both raised their price targets — Morgan Stanley by 4% to $5.10 and Jefferies by 2.5% to $6.40 respectively.
Australian Clinical Labs Ltd (ASX: ACL)
Shares in Australian Clinical Labs gained considerable momentum in December and the pulse of investor buying has continued into 2022.
Over the last month, shares have climbed almost 14%, even after falling from an all-time closing high of $6.20 on the first trading day of 2022.
Underpinning ACL's share price performance is the guidance upgrade released to the market last month. Management now forecasts net profit after tax (NPAT) of between $116.3-$128 million. That's a 35-36% upward revision on previous guidance.
It now also expects revenue to rise by another 13-14% on top of previous estimates. It's looking at $497-$517 million at the top versus its previous guidance of $437-$455 million.
Management notes the uptick in sales is underscored by strong COVID-19 testing demand.
Despite the move towards RAT, the company is optimistic around its COVID-19 testing, anticipating "heightened volumes of COVID-19 testing to continue during the remainder of FY22 due to the impact of new variants and outbreaks".
RBC Capital Markets agrees and has given the company a $6.50 per share valuation, indicating its bullish stance.
At the time of writing, this price target signifies a 15% upside potential. Goldman Sachs also recently rated Australian Clinical Labs as a buy with a $6.60 price target.
