# Health Sector (PE Average Higher than others)?



## michael_selway (11 January 2006)

Hi ive always wondered why the Health Sector has a PE Average higher than any other sectors? Has it always been the case or is it just a coincidence? Currently on Comsec PE is 23+. Is there a reason for it? Is it justified?

Thanks

MS

http://www.aireview.com/index.php?act=view&catid=8&id=3327


----------



## Ann (14 January 2006)

Hello Michael,

At a couple of  investor briefings I have attended recently, the analysts have been saying there is still a lot of upside potential for quality healthcare stocks. As future potential earnings are being built into the price of these stocks you will probably see a higher P/E ratio than average. It is basically an indication as to their future potential.

They suggest even in a downturn their business is insulated as well as the ageing population requiring more health care poducts and services.

Hope that helps to explain it a wee bit.

 Ann

PS This is a chart of the sector plus the constituents that comprise the sector.....

ANN  	 	Ansell Limited  	 
	VCR 		Ventracor Limited 		
	SYB 		Symbion Health Limited 	
	SIP 		Sigma Pharmaceuticals Ltd 		
	SHL 		Sonic Healthcare Limited 	
RMD  	 	ResMed Inc.  	 
	RHC 		Ramsay Health Care Limited 		
	PTD 		Peptech Limited 		
	HSP 		Healthscope Limited 
	DVC 		DCA Group Limited 		
	API 		Australian Pharmaceutical Industries Limited 		
	NRT 		Novogen Limited 	
	MYP 		Mayne Pharma Ltd 	
	CSL 		CSL Limited 
	COH 		Cochlear Limited


----------



## RodC (16 January 2006)

Health Sector is taking a hit today.

HSP has downgraded their earnings forecast and are down 18% at the moment.

RHC are also down 3.8%

Rod.


----------



## michael_selway (17 January 2006)

RodC said:
			
		

> Health Sector is taking a hit today.
> 
> HSP has downgraded their earnings forecast and are down 18% at the moment.
> 
> ...




Hi do u know what their forecast was and how much its been downgraded by actually?

Thanks

MS


----------



## RodC (17 January 2006)

Apparently analysts were forecasting profit of around $65 million, HSP have now said that it's only likely to be around $50 million.

Rod.


----------



## michael_selway (1 February 2006)

RodC said:
			
		

> Apparently analysts were forecasting profit of around $65 million, HSP have now said that it's only likely to be around $50 million.
> 
> Rod.




Yeah, they appear to have recovered/stabalised a bit now, hopefully good news from here on in.

Ann yeah Health Sector have done well these last few years, but HSPs fall effect must have given that index a bit of a hit.


----------



## Ann (1 February 2006)

Hi Michael, 

Yes there has been a bit of a retrace recently. If I am correct and this is a Head & Shoulders forming, there may be further retraces in the XHJ  yet to come......


----------



## wayneL (1 February 2006)

Ann said:
			
		

> Hi Michael,
> 
> Yes there has been a bit of a retrace recently. If I am correct and this is a Head & Shoulders forming, there may be further retraces in the XHJ  yet to come......




Nice MACD divergence also.


----------



## DRUGGIST (13 February 2006)

Any thoughts on why Sigma Pharmaceuticals SIP have gone into the doldrums post Arrow merger. It all seemed positive to me for both companies.


----------



## Julia (13 February 2006)

DRUGGIST said:
			
		

> Any thoughts on why Sigma Pharmaceuticals SIP have gone into the doldrums post Arrow merger. It all seemed positive to me for both companies.




Hello Druggist,

I think there is some question about alterations to the PBS listings being considered at present.  If some brand name pharmaceuticals were to be dropped off the list in favour of generics, or even if they were to have a part charge attached, that can significantly disadvantage a manufacturer.
I'm not really sure of the balance between original and generic brands in the combined company.

Also there is no broker as far as I know at present with a Buy on SIP.  Plenty of holds and one Sell.

Julia


----------



## DRUGGIST (13 February 2006)

Thanks Julia,

I guess my point is that SIP is now Australia's largest Generic manufacturer, as well as largest wholesaler.


----------



## adobee (7 August 2007)

Alot of the health care stocks have stayed responable stable through the latest shudder in stock prices. RMD must we one of the few stocks that has gone up.. With results due out tomorrow we will see if it can maintain the upswing.


----------



## billhill (8 August 2007)

michael_selway said:
			
		

> Hi ive always wondered why the Health Sector has a PE Average higher than any other sectors? Has it always been the case or is it just a coincidence? Currently on Comsec PE is 23+. Is there a reason for it? Is it justified?




I noticed no one really answered your question regarding the higher PE ratios of healthcare stocks then other sectors. This is a lasting phenomonem meaning that healthcare will usually alway have a higher average PE then the market as a whole. The reason for this is that healthcare is seen as an extremely safe, non cyclical and defensive sector. Healthcare relies on the  principle that people will get sick. This is a reliable and stable occurance thus unlike other sectors a downturn in the ecconomy will not likely result in difficulties in making money. It also helps that the healthcare sectors is strongly backed by governments. These are the reasons why the sector trades at a premium. So if you are looking for value in healthcare stock compare a stocks PE to the healthcare average PE and not the market PE.

Cheers


----------



## Wysiwyg (27 November 2016)

*Re: Health Sector*

A viewer posted on another thread about exploiting the elderly and investing in Health Care stocks. This chart shows a pattern of head and shoulders (red oblong) which suggests an end of trend. The Index is at a decision point now where the 4-5 year uptrend (white line) has been hit and price is in support/resistance (blue lines) levels. I would suggest trend line and support being broken as the end of trend. 

Of course anyone knowing the future direction should pile in now and make their fortune. 


Weekly


----------



## PharmBBs (1 December 2016)

DRUGGIST said:


> Thanks Julia,
> 
> I guess my point is that SIP is now Australia's largest Generic manufacturer, as well as largest wholesaler.




That's why I bought them the other day. 

Demand for generics (esp painkillers) is only going to increase imo. 



Wysiwyg said:


> A viewer posted on another thread about exploiting the elderly and investing in Health Care stocks.




Would that be me? XD


Anyway, my guess is that the recent drops are mostly due to exposure to other sectors (or just low confidence in the market in general). But tbh I don't actually know. Am curious to hear others' thoughts.

I'm not too worried about price movements tbh. I'm buying for 20+ years of dividends. Possibly longer if the trend of increasing life expectancy and decreasing birth rate continues.  As long as the companies don't go bust and the dividends keep coming, I'm happy.


----------

