The COVID-19 pandemic has changed how consumers and governments look at health and hygiene. As a result, shares in the sector could be poised to blossom in 2020 and beyond.

Here are 3 ASX shares exposed to the healthcare sector you should think of buying now for the long term.

Ansell Limited (ASX: ANN)

Ansell is a global leader in developing, manufacturing and distributing health and safety protection solutions. The company could be well poised to benefit in the post-COVID world as the population becomes more aware of safety and hygiene protocols.

In late March, Ansell reaffirmed its earnings per share guidance for FY20 and cited strong demand for its hand and body protection products. Ansell also assured investors that its balance sheet remains in a strong position and the company is working to maximise its product output.

Medibank Private Ltd (ASX: MPL)

The COVID-19 pandemic could result in consumers and households becoming more aware of their overall health and encourage trips to hospitals and general practices. As a result, many might look to spend money on private health insurers like Medibank for peace of mind.

In addition, with the federal government’s budget coming under pressure post-pandemic, private healthcare might become more popular as public health systems become constrained. This could see the emergence of alternative care models such as telehealth becoming more prominent.

In a recent letter to shareholders, Medibank provided assurance that the COVID-19 pandemic is expected to have no overall impact on the company’s FY20 financial outlook. The company also assured shareholders of its strong and debt-free balance sheet, whilst also elaborating that Medibank is well-positioned to benefit from changes in the healthcare sector.

Sonic Healthcare Limited (ASX: SHL)

Sonic is the third-largest pathology provider in the world, generating relatively defensive revenue from radiology and pathology services. Although the pandemic forced the company to withdraw its earnings guidance for FY20, Sonic was able to secure a contract from the Australian government to provide testing for COVID-19.

In addition to playing a crucial frontline role, Sonic also boasts a strong financial position with a balance sheet boasting almost $1 billion in cash on hand. This could allow Sonic to fuel its growth through acquisitions of smaller, struggling providers. Additionally, with the public being forced to live with the virus until a vaccine is found, Sonic could benefit from further contracts in the future.

Should you buy?

In my opinion, the ASX healthcare sector is poised to benefit from various tailwinds in the long term. Apart from an ageing population and the demand this has for healthcare, the sector could benefit from renewed consumer behaviour and the public’s approach to health and wellbeing post-pandemic.

I suggest that investors create a watchlist of ASX shares that could benefit from a boom in healthcare and wait for positive price action before making an investment decision.

More reading

• In a post-COVID world, could Australia be the next superpower?
• 3 ASX 200 pandemic winners and 3 losers
• Protect your portfolio with these defensive ASX shares
• ASX shares and investing trends that could boom post COVID-19
• Why Dicker Data, Medibank, Mesoblast, & Orora are dropping lower

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. and Sonic Healthcare Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The Altium Limited (ASX: ALU) share price is having a rare off day and is sinking lower on Tuesday afternoon.

At the time of writing the electronic design software company’s shares are down 4% to $35.35.

Why is the Altium share price sinking lower?

Investors have been hitting the sell button today after Altium warned that it could fall short of its aspirational goal of US$200 million in revenue in FY 2020.

This is because the company is anticipating some headwinds in the important months of May and June. These have been caused by the ongoing restrictions and lockdowns associated with COVID-19 in the United States and Western Europe.

Altium’s CEO, Aram Mirkazemi, explained: “While engineers are actively doing prototype designs, and the electronics industry is holding up relatively well, the cash preservation priorities of small to medium size businesses are likely to affect the timing of closing sales in our typically strongest months of the year being May and especially June.”

The company’s CFO, Joe Bedewi, added: “Our long-term aspirational goal of US$200 million revenue for the full year will require our typically strong months of May and June to be unaffected and have the usual strong finish. At this point, given the economic consequences of the continued restrictions, this is likely to be a low probability.”

Is this a buying opportunity?

While this news is slightly disappointing, it is not unexpected given how the pandemic has shaken the global economy.

Furthermore, the market was already predicting revenues lower than this aspiration target.

According to a note out of Goldman Sachs, it was forecasting FY 2020 revenue of US$194 million and EBITDA of US$71 million. This was largely in line with the market’s expectations, with the Bloomberg consensus at US$186 million and EBITDA of US$71 million.

And while there may be concerns that the weakness could carry over into FY 2021, Goldman Sachs remains comfortable with its estimates. Both the broker and the consensus are expecting revenue growth of 18% next year.

The broker commented: “… our FY21E revenue forecasts (and those of consensus) assume +18% growth on FY20E. We regard this as achievable at this stage but note it is likely to be more second half weighted than usual as 1H21E is likely to still remain relatively challenging.”

I agree and believe Altium’s growth will accelerate once these headwinds ease. Which could make it worth taking advantage of today’s share price weakness to pick up shares. Especially with the company still aiming to achieve market domination and 100,000 subscribers by 2025.

This will be double its expected FY 2020 subscriber base and, along with its other growing businesses, should drive strong earnings growth as it scales.

More reading

• ASX 200 sinks 1.3%: Big four banks drag ASX lower & Altium issues sales warning
• Why Altium, ELMO, Suncorp, & Webjet shares are sinking lower
• 3 ASX tech shares to buy now for long-term returns
• Altium share price on watch after warning of tough trading conditions
• In a post-COVID world, could Australia be the next superpower?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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Polynovo Ltd (ASX: PNV) shares could be about to surge in 2020. The ASX 200 healthcare company boasts a market capitalisation of $1.71 billion at the moment, but I think it could grow to be the next CSL Limited (ASX: CSL).

Why the Polynovo share price is climbing higher

Concerns about COVID-19 smashed the S&P/ASX 200 Index (ASX: XJO) in late February and for most of March. The Polynovo share price was no different and slumped as low as $1.32 per share on 23 March.

Since then, the ASX 200 has rebounded and gone on a bullish run. Polynovo has followed suit – at the time of writing, the ASX healthcare share is up 96.21% in the space of just 6 weeks. Pretty impressive, even for an Aussie growth share.

But I think that this 96.21% gain could be just the beginning. Polynovo has a strong research and development (R&D) pipeline and is continuing to bring more products to market. I can’t see demand for medical technology and Polynovo’s flagship NovoSorb product subsiding any time soon.

In fact, I think Polynovo could follow in CSL’s footsteps to become the next large-cap ASX healthcare share.

Will Polynovo be the next ASX healthcare leader?

CSL remains the gold standard in terms of ASX healthcare shares. The biotech giant is worth a whopping $137 billion right now and is up more than 40,000% since its IPO.

Polynovo could be on a similar path if things continue going well. The medical group reported record US quarterly sales for the March quarter and this COVID-19 volatility looks to be a minor speed bump.

The technical environment remains good for the company in 2020. In fact, the Polynovo share price is up more than 3,000% in just 5 years and could be one to watch in the years to come.

Foolish takeaway

It’s hard to pick value with all the noise in the markets right now. However, Polynovo looks to be a high-quality growth share with solid R&D prospects. That could make Polynovo a top ASX healthcare share to buy despite the economic uncertainty we’re seeing today.

More reading

• Where to invest $10,000 in ASX 200 shares immediately
• 3 must-read investing books for new investors
• Leading brokers name 3 ASX shares to sell today
• Is ‘buy-and-hold’ the best way to invest in ASX shares?
• ASX 200 sinks 1.3%: Big four banks drag ASX lower & Altium issues sales warning

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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