Top broker just put a buy rating on this ASX healthcare share

If you are looking for exposure to the healthcare sector and have a high tolerance for risk, then it could be worth considering the ASX share in this article.

That’s because the team at Bell Potter believes it could be a buy with huge upside potential.

Which ASX healthcare share?

The share that Bell Potter has initiated coverage on this week is Lumos Diagnostics Holdings Ltd (ASX: LDX).

It is a commercial-stage point-of-care (POC) diagnostics company that is busy developing rapid testing solutions for frontline healthcare settings.

Bell Potter believes the company’s FebriDx product is worth getting excited about. It explains:

FebriDx is a rapid POC test built around a simple clinical question, Does the patient have an acute respiratory infection (ARI) requiring antibiotics? Unlike other assays, FebriDx assesses the patient’s immune response to distinguish bacterial from nonbacterial illnesses after 10 minutes, via a single fingerstick blood sample. 

The dual biomarker (CRP/MxA) rapid read out supports antibiotic stewardship through real-time decision making that ensures lower and more effective antibiotic use. The journey has been long and has had some setbacks, but now there is a clear path to commercial success following FDA approval with CLIA waiver and reimbursement from CMS that delivers a starting gross margin of 60% and capacity to increase it to 80% over time.

The good news is that the broker highlights that this product gives the ASX healthcare share an estimated US$1 billion market opportunity. It adds:

The CLIA waiver for FebriDx in March 2026 expanded access to eligible sites by c.8.5x from c.32k to c.277k sites via enabling lower-complexity clinics to perform the FebriDx rapid diagnostic test. The waiver provides access to clinics that are a better fit for FebriDx with lower-complexity front-line settings where FebriDx’s rapid, analyserfree workflow is better aligned with real-time prescribing decisions. LDX claims it is now exposed to c.80m annual patient visits to Urgent Care / Primary Care Physicians which creates a c.US$1b opportunity.

Big potential returns

According to the note, the broker has initiated coverage on Lumos Diagnostics shares with a buy rating and 25 cents price target. 

Based on its current share price of 8.6 cents, this implies potential upside of 190% for investors over the next 12 months.

Commenting on its initiation, Bell Potter said:

We initiate coverage with a BUY recommendation and a 10-yr DCF-based valuation/ TP of $0.25/sh, assuming a WACC of 13% and TG of 3.5%. Our TP offers material upside which relies on ensuring deep utilisation by WellStreet and wider adoption of FebriDx over time.

The post Top broker just put a buy rating on this ASX healthcare share 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.