ASX 200: three stocks to watch as of 6 February

The ASX 200 added 47 points (0.67%) on Friday to close at 7558, as the ASX 200 locked in a fifth straight week (0.86%) of gains.

At a sector level, gains were led by the Healthcare (+4.81%), Real Estate (+4.35%), and IT (+4.30%) sectors. At the same time, the Energy sector fell -2.14% to be back to flat on the year.

Driving the Healthcare sector's outperformance, heavyweight CSL surged 6.5% to its highest weekly close in fourteen months ($314.27). Many surgeries and treatments that were delayed during Covid have resulted in long waiting lists and a solid stream of future demand for many Healthcare companies.

In this week's Three Stocks to Watch, we review the recent news and charts of three ASX-listed Healthcare stocks and if they can build on recent gains.

• CSL (CSL)

Covid is now mainly in the rear vision mirror, and aided by its acquisition of Vifor Pharma, a Swiss biotech that specialises in renal disease and iron deficiency, CSL has a bigger footprint within the industry and a more diversified earnings stream than ever before. This has resulted in broker upgrades ahead of CSL's 1H2023 earnings report on Tuesday, February 14th.

As viewed on the chart below, the share price of CSL had, until late last week, spent the past three years trading in a range between $340 and $240 as Covid increased costs and reduced the number of plasma collections - an essential raw material used in many of CSL's therapies.

After last week's storming run higher, CSL is eying a good layer of resistance at $320, coming from November 2021 and November 2020 highs. Should a break of this resistance occur, it would then set up a test of the February 2020 all-time high of $342.75.

On the downside, should CSL fall back into the trend channel and below a layer of horizontal support $305/300, it would warn the break higher has failed and of another round of sideways price action.

CSL daily chart

• Cochlear (COH)

Cochlear, the bionic ear-making company, was another healthcare company whose product offerings were impacted during the pandemic and whose share price was range bound until late last week.

Ahead of its 1H2023 earnings report on Wednesday, February 15th, the share price of Cochlear has broken above downtrend resistance to be eyeing a good band of resistance between $226 and $236 (from highs in April and August of last year). Should the share price see a sustained break above $236, it would open up a test of the $257.76 all-time high.

On the downside, should the share price of COH fall back into the trend channel and below a layer of horizontal support $215/210 area, it would warn the break higher has failed and of more sideways price action in the foreseeable future.

Cochlear daily chart

• Sonic Healthcare (SHL)

Unlike the two healthcare companies above, Sonic Healthcare's earnings were boosted by the arrival of Covid, as it moved to provide tests and immunisations on top of its regular healthcare services.

With Covid now mainly in the past, Covid revenues are significantly lower, and base fees have been reduced.

Despite continued strong underlying demand for Sonic diagnostic health care, the share price of SHL is 32% below its $46.95 high. It appears comfortable trading in the low $30s and needing a new catalyst to reclaim ground lost over the past 12 months.

Sonic Healthcare daily chart

The figures stated are as of February 6th, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

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