Why now is the time to buy low on these ASX healthcare shares with up to 84% upside

It has been well documented the headwinds that have hit ASX healthcare shares in recent times. 

Rising interest rates, tighter capital markets, and a more challenging funding environment have weighed heavily on the sector. This has particularly impacted smaller, early-stage companies that remain reliant on external capital to fund growth. 

Yet, beneath the broader weakness, there are signs that the outlook is beginning to improve. Valuations have reset significantly, and a number of quality businesses now offer compelling long-term growth opportunities.

Two that fit this criteria are Mesoblast Ltd (ASX: MSB) and Sigma Healthcare Ltd (ASX: SIG). 

The team at Bell Potter have provided fresh guidance on both ASX healthcare stocks, tipping a big 12 months. 

Here's what the broker had to say. 

Sigma Healthcare shares looking cheap 

Sigma Healthcare was formed in February 2025 following a merger of the legacy Sigma Healthcare with Chemist Warehouse Group. 

The merger integrates the distribution power of the legacy Sigma business with one of Australia's most recognised retail pharmacy franchisors. 

In yesterday's report, Bell Potter said the Chemist Warehouse merger is delivering scale, synergies, and operating leverage. Additionally, the pharmacy business is benefiting from structural growth. 

The broker saw full-year results as broadly in line with expectations, with revenue up 15.5% and normalised EPS rising 22% to 6.3 cents. 

Growth was driven by strong pharmacy sales. Net debt and leverage also improved materially, although most of the leverage reduction came from higher EBITDA rather than lower debt. Overall, Bell Potter sees a business with strong growth and improving efficiency that is now trading at its cheapest valuation since the merger.

Based on this guidance, Bell Potter has a buy recommendation on this ASX healthcare stock and a $3 price target. 

From current levels, this indicates 14% upside. 

Massive upside for Mesoblast 

This ASX healthcare stock has been relatively flat over the last year. 

It is a biotechnology company that develops and commercialises allogeneic cellular medicines to treat complex diseases resistant to conventional standards of care.

The company released annual results yesterday.

Bell Potter said the ASX healthcare company's results were broadly in line with expectations.

The outlook remains very positive, with Ryoncil expected to deliver continued double-digit growth, and major catalysts ahead from Rexlemestrocel in heart failure and chronic lower back pain. 

The broker has issued a buy recommendation and set a $4.45 price target for this ASX healthcare stock. 

From yesterday's closing price, this indicates over 84% upside. 

MSB has a long pipeline and label expansions for Ryoncil alone which we expect will come to market on a 3 to 5 year time horizon.

The post Why now is the time to buy low on these ASX healthcare shares with up to 84% upside appeared first on The Motley Fool Australia.

Motley Fool contributor Aaron Bell 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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