This ASX healthcare stock is up 12% in 2 days since All Ords inclusion: Should you buy?

4DMedical Ltd (ASX: 4DX) shares are having another positive session.

At one stage today, the ASX healthcare stock was up as much as 7.5% to 78 cents.

When its shares hit that level, it meant they were up 12% in the space of just two days.

Why is this ASX healthcare stock jumping this week?

The catalyst for this rise has been news that the company’s shares will be added to the All Ordinaries index later this month.

According to the update from S&P Dow Jones Indices, the medical research technology company is one of a number of new additions that will join the famous All Ordinaries index at the next quarterly rebalance on 18 March.

Furthermore, it will also join the S&P/ASX All Technology Index on the same day in the place of the ejected FINEOS Corporation Holdings PLC (ASX: FCL).

Is this good news?

Generally speaking, this can be very good news for a company’s share price.

That’s because fund managers often have restrictions on the shares they can buy. This is to stop them from risking client funds in speculative investments.

It’s possible that some fund managers have investment mandates that allow them to invest in All Ordinaries shares. So, if they have been waiting to grab a piece of this ASX healthcare stock, this rebalance will allow them to finally press the buy button.

In addition, index funds that track the All Ordinaries or S&P/ASX All Technology Index will need to buy shares to reflect the changes.

Should you invest?

Bell Potter is very positive on the company, though it sees it as a higher risk option.

The broker currently has a speculative buy rating and $1.10 price target on the ASX healthcare stock.

This implies potential upside of over 40% for investors from current levels.

The post This ASX healthcare stock is up 12% in 2 days since All Ords inclusion: Should you buy? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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