The healthcare sector has been one of the most consistent performers over the past 10 years, underperforming the ASX200 only 2 times over the past decade. However, increased regulatory scrutiny and soft industry data have taken some gloss off the domestic service providers (SHL, PRY, RHC, HSO, CAJ, IDX), with ongoing government reviews creating earnings uncertainty and representing a near-term overhang. While we continue to view sector long-term prognosis as good and fundamentals as sound, we acknowledge sector sentiment is poor and investors should be positioned in subsectors with lower exposure (ie aged care, pharma). We expect large/mid-cap names to be in-line this reporting season, but see risk skewed to the upside for BKL and to the downside for SHL, CAJ and SRX. Link to report.
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