The flagging housing market and sagging consumer sentiment ahead of the federal and NSW elections have affected the performance of an unlikely ASX-listed exponent - the assisted reproduction outfit Virtus Health (VRT, $3.98).
Shares in Virtus Health plunged by nearly 20% yesterday after the fertility service provider warned falling demand for IVF services and competition from low-cost operators has hit first-half volumes and will affect full-year results without a rebound in demand and profit margins.
A key investing theme at Montgomery Investment Management has for some time been the positive financial impact on healthcare companies from an ageing western demographic. Given that the sector is stable and growing, it’s a must have, at the right price, in our investment portfolios. Of the invested assets in The Montgomery [Private] Fund, healthcare currently occupies approximately 26%.
UBS reviews volume trends for the Australian IVF market and the implications. Data is positive for Virtus Health and the broker updates growth assumptions. Earnings estimates are upgraded by 1-11% across FY19-21.
Recent Medicare data suggests IVF cycle numbers remain solid and Morgans reviews FY16 forecasts, tightening margins slightly to reflect a traditionally weaker period and modestly higher depreciation charges.