Why these 3 ASX healthcare shares could get a boost from the federal budget

We check whether additional funding for COVID-19 testing might impact these ASX shares?

| More on:
A group of medical researchers stands side by side with each other wearing white coats in their research laboratory with scientific equipment in the background.

Image source: Getty Images

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

Key points

  • The federal budget committed $546 million in government spending on COVID-19 PCR testing
  • That could be good news for ASX pathology shares Sonic Healthcare, Healius, and Australian Clinical Labs, according to one broker
  • Though, the broker notes that additional RATs offered to concession card holders and kids could offset some demand for PCR testing

The federal budget has, understandably, been the talk of the town today, with many market watchers questioning which shares will be budget winners and which might be less fortunate. And while ASX stocks in the retail, fuel, and automotive sectors have been in focus for various reasons, one broker is flagging a win for healthcare shares.  

So, why are ASX healthcare shares Sonic Healthcare Limited (ASX: SHL), Healius Ltd (ASX: HLS), and Australian Clinical Labs Ltd (ASX: ACL) in the post-budget spotlight? Let's take a look.

These 3 ASX healthcare shares might benefit from the budget

Broker RBC Capital Markets believes ASX healthcare shares could get a boost from extra spending on Medicare announced in the 2022/23 budget, as reported by the Australian Financial Review.

The broker is keeping an eye on ASX pathology giants on the back of a $546 million commitment to Medicare Benefits Schedule items used to conduct PCR tests.

The funding is intended to support Australia's pandemic response. However, it surprised the broker. RBC Capital Markets was quoted as saying:

The Government has extended the Medicare schedule for COVID testing.

However, the amount budgeted for 2022-23 suggests upside to our [financial year 2023] COVID testing forecasts if the budget assumptions eventuate.

Of course, more testing is likely good news for the pathology giants. Though, it might be slightly offset by more free Rapid Antigen Tests (RATs).

The government has also committed to spend another $1.6 billion to ensure all Australians have equitable access to RATs.

The broker's rose-coloured prediction didn't manage to boost the ASX healthcare giants' share prices on Wednesday.

None of the three pathology stocks significantly beat the S&P/ASX 200 Index (ASX: XJO)'s 0.67% gain.

At market close, the Sonic Healthcare share price is 0.17% higher at $35.79.

Meantime, Australian Clinical Labs ended the day in the green, gaining 0.2% to close at $5.11.

Finally, the Healius share price slightly outperformed the ASX 200 today. It rose 0.68% to finish at $4.43.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Australian Clinical Labs Limited and Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Healthcare Shares

Cropped shot of an attractive young female scientist working on her computer in the laboratory.
Healthcare Shares

Why this top broker expects CSL shares to surge 26%

A leading broker foresees a big rebound ahead for CSL shares. But why?

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Healthcare Shares

Guess which ASX All Ords stock is jumping on big US news

This small cap is catching the eye on Thursday. But why?

Read more »

three excited doctors with hands in the air
Healthcare Shares

Two ASX healthcare shares that could be set to double

This broker has buy recommendations on these two shares. 

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Healthcare Shares

Telix shares jump 7% on big US news

Let's see what is getting investors excited on Wednesday.

Read more »

An older gentleman leans over his partner's shoulder as she looks at a tablet device while seated at a table.
Healthcare Shares

Macquarie tips 28% upside for this ASX healthcare stock

The broker expects big things from this New Zealand retirement village developer and operator.

Read more »

Teamwork, planning and meeting with doctors and laptop for medical, review and healthcare. Medicine, technology and internet with group of people for collaboration, diversity and support in hospital
Healthcare Shares

$10,000 invested in these ASX healthcare shares 5 years ago is now worth…

These healthcare stocks have brought big returns for investors 

Read more »

A man wearing a white coat and glasses is wide-mouthed in surprise.
Healthcare Shares

Guess which ASX 300 stock is crashing 55% today

What's going on with this stock? Let's see why investors are hitting the sell button.

Read more »

Woman serving customer in pharmacy.
Healthcare Shares

Up 132% in a year, are Sigma Healthcare shares still a good buy post the Chemist Warehouse merger?

After gaining 132% in 12 months, it too late to buy Sigma Healthcare shares today?

Read more »