Admedus Limited (ASX:AHZ), a A$67.52M small-cap, is a healthcare company operating in an industry, which has experienced tailwinds from issues such as higher demand driven by an aging population and the increasing prevalence of diseases and comorbidities. Healthcare analysts are forecasting for the entire industry, a positive double-digit growth of 17.52% in the upcoming year , and a massive growth of 42.18% over the next couple of years. This rate is larger than the growth rate of the Australian stock market as a whole. Today, I’ll take you through the sector growth expectations, and also determine whether Admedus is a laggard or leader relative to its healthcare sector peers. See our latest analysis for Admedus
What’s the catalyst for Admedus’s sector growth?
Personalized and data-driven equipment underpins the future advancement and structural shift in the healthcare equipment industry. In the past year, the industry delivered growth of 4.05%, though still underperforming the wider Australian stock market. Admedus lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook seems uncertain, with a lack of analyst coverage, which doesn’t boost our confidence in the stock. This lack of growth and transparency means Admedus may be trading cheaper than its peers.
Is Admedus and the sector relatively cheap?
The healthcare industry is trading at a PE ratio of 23.7x, above the broader Australian stock market PE of 17.9x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry did return a higher 18.44% compared to the market’s 11.86%, which may be indicative of past tailwinds. Since Admedus’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Admedus’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:
Admedus recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If the stock has been on your watchlist for a while, now may be the time to buy, if you like its ability to deliver growth and are not highly concentrated in the healthcare industry. However, before you make a decision on the stock, I suggest you look at Admedus’s fundamentals in order to build a holistic investment thesis.
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1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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2. Historical Track Record: What has AHZ’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Admedus? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.