Where Morgan Stanley stands on these 8 healthcare stocks post-reporting season

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Morgan Stanley issued a research note on Wednesday outlining its re-rates of eight different ASX-listed large-cap healthcare stocks in the fading light of 2023’s first-half reporting season. The investment bank highlighted two big themes affecting the sector: Private Health surgeries and claims have moved higher, but both remain below pre-COVID levels Labour costs to healthcare services remain elevated as wage growth accelerates After a lacklustre 2022 for the healthcare sector, the bank remains equal- or overweight on the eight selected healthcare large-caps, with no underweight ratings.If Morgan Stanley analysts are any guide, broker consensus is clearly warming up to the healthcare sector in early 2023—with some stocks stronger than others.“Current prices” are accurate as at 2:15pm (AEST) Wednesday 1 March.CSL Ltd ASX:CSLRating: OVERWEIGHT (retained) Price target: $339.00Current price: $294.09Morgan Stanley has retained its OW rating for CSL despite lowering its price target from $354/sh to $339/sh. Analysts predict margin recovery will be gradual through CY23 and beyond, with higher costs continuing to impact the books. The bank has also stated physician and prescriber behaviour will need to change out of the mindsets adopted during last year, when supply chain constraints were more intense. Commentary:“That said, we interpret management as bullish regarding medium/longer-term Immunoglobulin (Ig) yield improvements with this commentary provided: 1) market demand growth is 6-9% p.a.; 2) CSL expects to beat market demand in its volume growth; and 3) with future Ig yield improvements, CSL could meet market demand without needing to increase collected plasma centers.”Ebos Group ASX:EBORating: OVERWEIGHT (retained)Price target: $43.00Current price: $39.76Morgan Stanley analysts are bullish given that Ebos beat expectations in its first-half report, raising the price target to $43/sh from $41/sh.The team highlighted that antiviral product sales within the company’s Community Pharmacy division is a difficult dataset to forecast growth.Analysts expect growth in EBO’s Animal Care division of 10bps with Animal Care earnings margins 17.5% in 1HFY23 vs. 14.1% in 1HFY22. Commentary:“We see EBO holding a dominant market position through the access of two large brands, Chemist Warehouse and Terry White, providing benefits of scale within Community Pharmacy. We see E...

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