16. September 2021 | 11:58 CET
Siemens Healthineers, PuriflOH, Fresenius, Novavax - Focusing on health!
The pandemic outbreak in 2020 ushered in a new era. People's health is once again moving to the center of attention. Politicians worldwide see themselves obligated to make public life safe, but whether this will be 100% successful remains questionable. Ultimately, it will depend on the commitment of private companies to what extent the existing health issues can be solved and by what means. On the capital markets, the healthcare sector has been sailing on the highest wave for months because the dangers for billions of people need to be reduced, and framework conditions for public life need to be created. Who benefits the most?
time to read:
ISIN: SIEMENS HEALTH.AG NA O.N. | DE000SHL1006 , PURIFLOH LTD | AU0000010548 , FRESENIUS SE+CO.KGAA O.N. | DE0005785604 , NOVAVAX INC. DL-_01 | US6700024010
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Siemens Healthineers - With momentum into the DAX
Siemens Healthineers AG is a 2018 spin-off of Siemens AG and is currently listed on the MDAX. With the index changeover in mid-September, the Company will be represented in the DAX 40. The Company's core areas include imaging for diagnostics and therapy, laboratory diagnostics, digital healthcare services and hospital management.
The Erlangen-based Company offers systems for X-ray, CT and magnetic resonance imaging and blood and urine tests. The Company's medical equipment and clinical information technology are used by hospitals and research laboratories and are applied in various subspecialties such as cardiology, oncology and neurology.
Medical systems suppliers are in demand everywhere, not least because of the pandemic. The public has learned during the crisis that a functioning healthcare system is more than a cost factor. In the current fiscal year 2020/21, Siemens Healthineers had already raised its forecast several times, partly due to the high demand for corona tests. The Company now plans to present its new medium-term targets at the upcoming Capital Markets Day in November.
After the costly acquisition of US cancer therapy specialist Varian, we think the balance sheet needs to catch its breath because the integration of US units does not always go smoothly. The Siemens Healthineers share has performed well and is up more than 50% on a 12-month basis. The Company's positioning is good, but a DAX listing is no guarantee for further share price increases.
PuriflOH Ltd. - Air purification in focus
In the COVID-19 pandemic, air and building cleaning are of particular importance. Aerosols should dissipate quickly, and contact surfaces in public buildings must be cleared of germs and biological contaminants. PuriflOH is an Australian Company that has addressed these issues and is also active through a US subsidiary based in Detroit.
The Company's primary focus is on innovative solutions for cleaning the air, water and contact surfaces in public and private areas. Such measures are essential for the economy, especially in government, business and industrial areas where many people work in confined spaces. PuriflOH's systems are already patented, and it currently has a two-stage process technology specially adapted for equalizing biological and chemical contaminants in the air.
Expenditure on research and development in recent years is now paying off, as the current solutions are scalable to any degree, meaning that profit margins increase with each order. The Company is currently looking for suitable IP licensing partners for industrial-scale production to sustain the business. Of course, investments are also needed in sales. The Company is already in successful talks with air purification specialists and water treatment companies on the commercialization side. The annual figures for 2020/21 still show a loss of AUD 3.1 million, but this should mean that most of the market entry expenditures have already been made.
With a market capitalization of AUD 42.6 million, the technology company is currently still moderately valued. The upcoming government health measures alone will likely generate substantial orders for corresponding technical solutions in the next few years. With its patented systems, PuriflOH is ready for this and can grow accordingly.
Fresenius - Things are not going quite so well
Fresenius has not been able to get off the ground despite many buy recommendations. Despite new highs for the year on the DAX, the health care specialist has recently lost around 7%. Corona-related losses at the dialysis subsidiary Fresenius Medical Care (FMC) continued to weigh on the second quarter. The Company's original assumption that the general conditions are likely to improve in the current half of the year is increasingly in jeopardy from today's perspective.
Although the slightly raised forecasts suggest growth in adjusted earnings in the low single-digit percentage range, the pandemic could again lead to uncertainties in the fall. At FMC, earnings in the past quarter of the year had slumped much more sharply than expected. The parent company had announced a package of measures in the spring, which should bring improvements in earnings of at least EUR 100 million per year by 2023. We do not yet believe that the share price will turn around sustainably in this environment.
Novavax - The vaccine is coming in the fall
Things are now getting exciting at Novavax. The highly hyped stock will launch the first combined Corona influenza vaccine in the fall. Currently, participants have been recruited for the Phase I/II trial, which will evaluate the safety and immunogenicity of a combination vaccine made up of the Novavax and Covid-19 seasonal influenza vaccines. The clinical trial combines the recombinant protein-based vaccine candidates NVX-CoV2373 and NanoFlu and the patented saponin-based Matrix-M adjuvant into a single formulation.
The combination of these two vaccines, which individually have provided excellent results with favorable safety and tolerability profiles, may result in greater efficacy for the healthcare system and achieve a high level of protection against Covid-19 and influenza with a single treatment. Participants in the current study must have either been previously infected with the SARS-CoV-2 virus or vaccinated for at least eight weeks before enrollment.
If the approval is successful, the willingness of many people with current reservations to be vaccinated should get another boost. We expect that the share will then also leave its current consolidation phase and make significant gains. The market capitalization is currently USD 17 billion, which is not too expensive for potential sales of over USD 5 billion in 2022.
The healthcare sector is particularly challenged in the current pandemic. In the case of Siemens Healthineers, the numbers improved by leaps and bounds; for Fresenius, the virus was more of a damper. For Novavax and PuriflOH, the general conditions currently look very good. PuriflOH is still small, but scaling up sales can bring significant momentum here.