A number of health stock confront challenges given recent proposed government reforms.
As highlighted earlier in – Buy, Sell, Hold – what the brokers say, the government plans to make changes to the bulk billing of diagnostic imaging services as part of the MYEFO announcement.
Given these changes, Elio D’Amato from Lincoln Indicators does not like Capitol Health (CAJ).
“While CAJ may look to be trading at a substantial discount, the company continues to operate in a tough environment with government policy changes creating uncertainty,” D’Amato says.
“While we believe there is a case for potential long-term investment, current events have created volatility in the industry.”
“We believe there are better exposures to be had in other parts of the healthcare sector,” he says.
D’Amato likes Domino’s Pizza Enterprises (DMP) following the company’s acquisition of the German retailer and franchise business, Joey’s Pizza.
DMP will also be entering into a joint venture (JV) agreement with the UK-listed Domino’s Pizza Group PLC. The transition will see the existing network of 212 stores and the addition of 10-15 stores from the UK-listed Domino’s come under the JV umbrella.
“If Domino’s can continue the success of the Joey’s brand and then transition this over to the existing struggling Domino’s brand in Germany, then they should be well-placed to meet their European objectives,” D’Amato says.
Evan Lucas from IG Markets likes the Catapult group (CAT).
The personal GPS (global positioning system) fitness firm signed off on another contract with the Australian Football League (AFL).
“This will push revenue to new heights and will see CAT looking to its new goal of personal units as its next big deal,” Lucas says.
Lucas has been negative on Slater and Gordon (SGH) all through 2015 and sees further challenges for the embattled business.
“The next issue I see is an emergency equity raising that will be at a substantial discount to current price. The stock remains a trap for investors and a favourite of short-seller,” Lucas says.
Our Super Stock Selectors is a survey of prominent analysts, brokers and fund managers. Each week we ask them to name a stock they like, and one they don’t like. We purposely ask for ‘likes’ and ‘dislikes’ instead of recommendations, so it provides an idea of what the market is looking at, rather than firm buys or sells.
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