Healthcare stocks lose lustre after breakneck price surge

Expansion costs are chipping away at profits.

Healthcare players are losing their status as market darlings after the sector's outperformance in past quarters, according to a report by OCBC.

OCBC said that following the outperformance of the FTSE ST Health Care Index (FSTHC) in 2015, healthcare stocks now look unattractive on a broad-based level.

Apart from their relatively expensive valuations, healthcare players will also grapple with headwinds in coming quarters. For instance, healthcare providers like Raffles Medical Group and Q&M Dental will struggle with higher expansion-driven costs, while medical device manufacturers will face soft sales. However, glove manufacturers continued to perform well.

"The long term prospects for local healthcare providers remains clear. Following the outperformance of the FTSE ST Health Care Index (FSTHC) in 2015, the pace however has slowed for FSTHC, gaining only 1.4% vs. the STI’s decline of 0.4% YTD. The FSTHC forward PER currently remains above its 2-year historical average, still unattractive on a broad-based level,” OCBC said.

Also Read

Dental radiology equipment market to grow by $2.45b by 2028

What to expect with Australia’s $739m Frankston Hospital Redevelopment?

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit