What's the outlook for ASX healthcare shares in FY25?

Stressed thoughtful old female general practitioner doctor physician looking in distance, considering difficult medical problem solution or illness treatment, working on computer in clinic office.

ASX healthcare shares are set for growth in FY 2025, with several key players positioned to perform.

But first, winding back, it was an interesting period for the sector last financial year. The S&P/ASX 200 Health Care Index (ASX: XHJ) climbed over 5% into the green.

Meanwhile, the broader S&P/ASX 200 Index (ASX: XJO) increased around 7% in the same time, leading to a circa 2% underperformance by the sector.

With that in mind, let's delve into what the experts are saying about three of the top ASX healthcare shares right now.

ASX healthcare majors worth noting in FY 2025

Analysts at Wilsons Advisory are bullish on healthcare. According to my colleague James, the firm says the outlook "is highly attractive" for ASX healthcare shares this year.

It says healthcare could "outperform over the medium-term", with the combination of strong earnings growth, and below-market valuations.

Large-cap ASX healthcare stocks like CSL Ltd (ASX: CSL) are the giants of the healthcare sector. Despite a modest performance in FY 2024, experts are optimistic about the biotech giant's prospects for FY 2025.

Macquarie analysts gave CSL an outperform rating in June with a 12-month share price target of $330, driven by strong earnings growth in its Behring business.

Sam Byrnes from ECP Asset Management also predicts CSL shares could reach $500 by 2027, highlighting the long-term growth potential of this biotech giant.

Furthermore, Wilsons noted that CSL's earnings trajectory is considerably stronger than the broader market, potentially making its valuation attractive.

"Valuation-wise", the firm said, "CSL is broadly in line with our 'fair value' range, balancing the fact that a) CSL trades on forward [price-to-earnings] of ~27x which is below its 5-year average, and b) CSL is somewhat 'expensive' relative to global biopharma peers."

ResMed also in view

Analysts are bullish on ResMed Inc. (ASX: RMD)'s prospects in FY 2025. This is due to the ASX healthcare share's market position in the sleep disorder treatment market.

Bell Potter rates ResMed a buy with a price target of $36.00, citing the massive under-penetration of the obstructive sleep apnoea (OSA) market as a major growth opportunity. This represents a 26% upside potential at current prices.

Wilsons' analysts also highlight that ResMed's shares trade at a sharp discount to historical multiples. Given that concerns over GLP-1 weight loss drugs are starting to ease, a re-rating could be on the horizon.

It noted, "We expect RMD's valuation to re-rate higher as GLP-1 concerns progressively abate and the market shifts its focus to the strong fundamental outlook of the business."

ECP Asset Management also found ResMed attractively valued despite the GLP-1 weight loss drug trend. This was supported by Swell Asset Management in June, who said "continues to thrive".

CommSec data shows that many brokers seem to echo this sentiment, with 14 brokers rating it a buy against 10 holds and no sell ratings.

Sigma Healthcare deal could be a catalyst

Sigma Healthcare Ltd (ASX: SIG) is another ASX healthcare share in focus this year. It has seen its share price rally despite recent challenges.

Its proposed merger with Chemist Warehouse has been a hot topic, with the Australian Competition and Consumer Commission (ACCC) raising preliminary competition concerns.

The ACCC noted the competitive threat to independent pharmacies that might be caused by the merger, considering it a major structural change for the pharmacy sector.

The ASX healthcare share's market presence is embellished by its diverse portfolio of low-cost pharmacies. These include names like Amcal+, Guardian, and PharmaSave. The merger – if successful, would create a pharmacy powerhouse in the Australian market.

Despite these regulatory hurdles, Sigma's share price has climbed 56% in the past 12 months, demonstrating investor confidence.

The outcome of the ACCC's review will be crucial for its performance in FY 2025, in my view. Analysts at UBS are cautiously optimistic, noting that while the merger could face challenges, the potential benefits for Sigma's market reach and operational efficiencies could be substantial.

It appears the market agrees, given the change in share price.

Healthy view for ASX healthcare shares in FY 2025

The outlook for ASX healthcare shares in FY 2025 appears bright. Each of CSL ResMed and Sigma Healthcare are in focus for the sector.

Investors might want to keep a close eye on these companies as they navigate the new financial year. Remember always to conduct your own due diligence.

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