Healthcare rally rolls on as CSL cools and Neuren surges

• ASX healthcare sector has risen in the first month of November after rallying 6.32% in October
• Morgans has downgraded CSL to a hold after its share price more than doubled from June lows
• Broker has lifted its 12-month price target for ResMed after ‘stronger than expected’ Q1 FY27 results

Morgans senior healthcare analyst Scott Power is away this week so his colleague Iain Wilkie and the team step into his regular Stockhead column inches to share their insights on the sector.

The ASX healthcare sector has moved higher for the first week of November, after outperforming the benchmark in October.

At market close on Friday, the S&P/XHJ had moved up 2.10% over the past five days, while the benchmark S&P/ASX 200 (ASX:XJO) gained 1.73%.

In October the XHJ rose more than 6% as investors looked to defensive sectors in a volatile market, outperforming the XJO, which rose just 1%.

“October was a good month to be a healthcare investor,” Wilkie said.

“The sector comfortably outpaced the broader market, with the large caps doing most of the work as ProMedicus (ASX:PME), ResMed (ASX:RMD) and CSL (ASX:CSL) all rallied hard.”

Morgans downgrades CSL after share price recovery

Morgans has downgraded CSL from a buy to a hold with analyst Derek Jellinek noting it is “time for a breather” with the blood products and vaccine giant’s share price more than doubling from June lows.

“While we remain constructive on the underlying franchises and longer-term earnings potential, the recovery has been driven principally by a restoration of confidence rather than a material improvement in near-term earnings expectations,” he wrote in a research note.

Jellinek wrote that FY27 revenue was expected to remain flat, with net profit after tax growth of ~5%, largely driven by “below-the-line factors”.

“Share price appreciation has been driven by multiple expansion and improving sentiment, rather than earnings upgrades,” he wrote.

Jellinek remains positive on CSL’s core plasma business Behring, which he wrote was central to its longer-term investment case with mid-single-digit revenue growth targeted for FY27, supported by mid-to-high-single-digit growth in immunoglobulins.

“Improvements in plasma collection efficiency, manufacturing productivity and product mix should also support margin recovery,” he wrote.

However, Jellinek noted other parts of the business presented challenges with an expected revenue hit for CSL Vifor of ~25%.

The drop reflects generic competition in iron therapies, changes to US reimbursement arrangements for VELPHORO and the withdrawal of TAVNEOS marketing authorisation in Europe following concerns about data integrity in its pivotal clinical trial.

CSL’s Seqirus business is also navigating a difficult US vaccine market, although Jellinek noted its differentiated portfolio “continues to demonstrate relative resilience” with low-single-digit revenue growth expected in FY27.

Jellinek wrote CSL’s transformation program was another important part of its recovery story, having delivered US$176 million in savings during FY26, ahead of its initial target, with a further US$220m targeted in FY27.

“We recognise the substantial recovery already delivered while retaining a constructive longer-term view on the plasma franchise,” Jellinek wrote.

“However, we believe further upside will require evidence of stronger organic growth, sustainable margin expansion and improved earnings visibility.”

With the CSL share price having run through Morgans’ previous 12-month price target of $187.71, the broker has revised it up to $210 but reduced the rating to a hold.

Morgans lifts ResMed price target after strong start to FY27

Morgans has lifted its 12-month price target from $39.50 to $40 and has an accumulate rating on sleep health company ResMed after its Q1 FY27 results.

In a research note Jellinek wrote the result was “stronger than expected” supported by gross margin expansion and healthy underlying demand.

Revenue for Q1 increased 6% to US$1.415 billion, while adjusted EBIT rose 5% to US$506m.

Gross margins expanded 50 basis points to 62.5%, which was 140bps ahead of Morgans’ expectations, driven by manufacturing efficiencies, productivity improvements and favourable product mix.

However, Morgans noted that some US manufacturing start-up and supply chain costs had shifted into Q2, benefiting first-quarter margins.

Jellinek wrote the underlying performance of RMD’s core devices and masks businesses remained encouraging, with global device sales up 10% and masks revenue also increasing 10%.

He wrote there appeared to be no material slowdown despite concerns that GLP-1 weight-loss therapies, emerging oral treatments and the potential return of Philips to the market could weigh on demand.

RMD repurchased ~US$936m of shares during the quarter as part of its existing $1.5bn buyback program.

The company maintained its FY27 guidance, forecasting revenue of US$5.75 bn to US$5.85 bn, representing growth of 2% to 4%, and earnings per share of US$12 to US$12.25, up 7% to 10%.

“We view underlying fundamentals as sound, supported by healthy US device demand, mask innovation, productivity initiatives and strong capital returns,” Jellinek wrote.

Neuren surges as ‘Daybue Stix is the fix’

Neuren Pharmaceuticals (ASX:NEU) rose 16% on Thursday after upgrading its full-year guidance on the back of surging US sales of its breakthrough Rett syndrome treatment Daybue.

US marketing partner Acadia Pharmaceuticals reported September quarter sales of US$140m, up 39%, driven by growing uptake of Daybue Stix.

The FDA approved Daybue (formerly trofinetide) in March 2023 as a strawberry flavoured oral solution, which needed refrigeration.

Daybue Stix was approved in December 2025 to offer a powdered formulation that can be dissolved in a preferred beverage (other than dairy) and does not require refrigeration.

More than half of US patients taking Daybue are now using the Daybue Stix formulation, compared with 40% at the end of the June quarter.

The stronger performance prompted Acadia to lift its full-year sales guidance to US$505-$520m, from its previous forecast of US$480-$510m.

NEU receives royalties on Daybue sales, with quarterly royalties reaching US$16.4m, up 51% year-on-year. The company has now upgraded its CY26 trofinetide income guidance to US$91-93m, compared with its previous forecast of US$53-56m.

The upgraded guidance includes a US$35m milestone payment triggered by the October launch of Daybu (without the ‘e’) in Germany.

“Stix seems to be the fix for Daybue and it is gaining a lot of traction,” Wilkie said.

“Acadia has reported strong satisfaction from Daybue Stix with the powder solution offering greater convenience.”

Nanosonics reaffirms FY27 guidance, makes key appointment

Nanosonics (ASX:NAN) has reaffirmed its FY27 guidance at its annual general meeting, while strengthening its board with the appointment of former Olympus Americas CEO Julien Sauvagnargues as a non-executive director.

Wilkie said the appointment brings significant endoscopy industry experience to the company as it prepares to commercialise Coris, its latest device designed to automatically clean the internal channels of flexible endoscopes.

“Sauvagnargues ran Olympus’ US$2.8 billion Americas business, overseeing more than 4,000 staff, the largest region of the flexible endoscopy leader,” Wilkie said.

“He gives NAN a US-based director in its largest market, with deep knowledge of endoscopy buyers and service models.”

NAN’s flagship Trophon device automates the high-level disinfection of ultrasound probes using patented hydrogen peroxide mist technology.

Coris represents an expansion into the much larger flexible endoscope reprocessing market, with the potential to create a new recurring consumables revenue stream.

The company reaffirmed FY27 revenue guidance of $220m to $228m, representing growth of 8-12% in constant currency.

Gross margin is expected to be 74-76%, with operating expenses of $156m to $163m, up 10-15%.

“The AGM was in line with expectations; management didn’t give much further colour on the day-to-day business other than saying Q1 FY27 trading was in line with their expectations,” Wilkie said.

“Key watch items ahead are the second FDA 510(k) for expanded indications, first UK Coris orders, the Australian launch, clinical publications, and the H1 FY27 result.”

Morgans retained an accumulate rating on NAN and a 12-month price target of $3.50.

BlinkLab gains momentum with ADHD study results

Blinklab (ASX:BB1) reported a “milestone-rich” Q1 FY27, with positive results from its first ADHD study highlighting potential of its smartphone-based neurobehavioural biomarkers, Scott Power wrote in a research note.

The study demonstrated 82% sensitivity and 83% specificity, supporting BB1’s expansion beyond autism into the larger ADHD market and underpinning development of its next-generation Dx2 platform.

BB1 reported a quarterly cash outflow of $1.8m, which Power said left the company with a healthy cash balance of $16.2 million.

During the quarter BB1 also strengthened its board with the appointment of former Apple Health clinical lead Dr Raphael Bernier.

Power noted upcoming catalysts include expected completion in Q4 CY26 of a pivotal autism study for its lead product Dx1, with an FDA 510(k) submission and approval targeted for H1 CY27.

The company is also expected to start a US ADHD pilot study in Q2 CY27. BB1 has four research program readouts expected over the next six months.

“BB1 is catalyst rich over the coming months which in this subdued market is important. We maintain our positive stance on the name,” Power wrote.

Morgans has a speculative buy rating on BlinkLab, with a 12-month price target of $1.76.

Vitrafy lifts partnerships in Q1 FY27

Partnerships were a highlight of Q1 FY27 for human and animal health cryogenic services company Vitrafy Life Sciences (ASX:VFY), which listed on the ASX in November 2025.

Wilkie said the addition of US blood centre network Versiti marked VFY’s third civilian blood collection partner in the country and a separate deal with Charter Medical opened a pathway into the cell and gene therapy (CGT) market.

“Partnerships with Vitalant, Howorth and now Versiti bring the company’s network to about 179 fixed collection sites, representing approximately 17% of the US civilian blood collection network,” Wilkie said.

“All three remain unpaid evaluations and devices only began deploying this quarter, so usage data is unlikely before H2 FY27,” Wilkie said.

Versiti will initially install two of VFY’s Guardion cryopreservation devices at its blood research institute in Milwaukee to develop protocols for frozen platelets that can be thawed without washing.

VFY’s cryopreservation platform combines its proprietary Smart Freezing and Smart Thawing technologies with LifeChain software to preserve and track biological materials, with potential particularly significant in platelet preservation.

Platelets typically last just five to seven days in liquid storage, while frozen platelets are rarely used in civilian practice because they require washing after thawing using centrifuges and trained staff.

“The case rests on displacing ageing legacy preservation technology in the US blood collection market,” Wilkie said.

VFY completed the build of nine Guardion devices in Q1 FY27 for existing partners and to support medical device testing. A further six were planned for delivery across October and November.

Wilkie said attention now turned to FDA device listing, targeted for December 2026.

“Mandatory validation studies on blood products already approved for freezing were still being prepared at quarter end, however, leaving a tight window to complete the work and submit the necessary documentation,” he said.

Morgans maintains a speculative buy recommendation for VFY and 12-month price target of $5.06.

The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.

Disclosure: Iain Wilkie and Scott Power own shares in ProMedicus, BlinkLab and Neuren. Scott Power and Nadine McGrath own shares in CSL.

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