The healthcare industry has received a great deal of attention in recent months thanks to the role it played so far in fighting COVID-19. While the pandemic is under control in most major economies, investors’ focus on the industry is not expected to decline anytime soon given the relatively inelastic demand for healthcare products and services, an aging population and the continued efforts of several companies to find cures or treatments for critical diseases.
Investors’ interest in the healthcare sector is evident in the Health Care Select Sector SPDR Fund’s (XLV) and iShares Global Healthcare ETF’s (IXJ) 12.3% and 10.6% returns, respectively, over the past six months. Adding to the positives, in his recently unveiled fiscal 2022 budget proposal, President Biden requested $133.7 billion for the department of Health & Human Services (HHS) budget, which represents a 23% increase beyond this year’s budget.
Given this backdrop, we think it could be wise to bet on Bristol-Myers Squibb Company (BMY) and Agilent Technologies, Inc. (A) because their consistent product innovations and solid financials should help them deliver solid upside in the near term.
Bristol-Myers Squibb Company (BMY)
Biopharmaceutical company BMY is engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of various biopharmaceutical products. The New York City-based company’s products include Empliciti, Opdivo, Sprycel, and Yervoy. It offers products for a range of therapeutic classes, including oncology, cardiovascular, and immunoscience.
BMY’s total revenues increased 2.7% year-over-year to $11.07 billion for the first quarter, ended March 31, 2021. The company’s non-GAAP gross profit for the quarter came in at $8.65 billion compared to $8.56 in the prior-year quarter. Its non-GAAP EPS was $1.74 compared to $1.72 in the year-ago quarter.
Analysts expect BMY’s EPS and revenue to increase 20.2% and 12.2%, respectively, year-over-year to $1.96 and $11.59 billion for the quarter ending September 30, 2021. It surpassed the consensus EPS estimates in three of the trailing four quarters.
BMY announced today that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) has recommended the approval of its Opdivo (nivolumab). Ian M. Waxman, M.D., the company’s development lead, gastrointestinal cancers, said, “The CHMP’s positive recommendation for Opdivo as an adjuvant treatment for esophageal or gastroesophageal junction cancer represents a step forward for people living with these cancers as we see the science translate into outcomes.” The stock has gained 14% over the past year to close yesterday’s trading session at $65.85.
BMY’s promising prospects are also apparent in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Value and a B grade for Growth, Quality and Sentiment. Click here to see the additional POWR ratings for BMY (Momentum and Stability).
BMY is ranked #4 out of 226 stocks in the Medical-Pharmaceuticals industry.
Agilent Technologies, Inc. (A)
Based in Santa Clara, Calif., A provides application-focused solutions for life sciences, diagnostics, and applied chemical markets worldwide. It operates through three business segments: life sciences and applied markets business, diagnostics and genomics business, and Agilent CrossLab business.
The company’s net revenue increased 23.2% year-over-year to $1.53 billion for its fiscal second quarter, ended April 30, 2021. A’s non-GAAP net income was $299 million, which represents a 34.1% year-over-year increase. Its non-GAAP EPS for the quarter increased 36.6% year-over-year to $0.97.
A’s EPS and revenue are expected to increase 26.2% and 16.4%, respectively, year-over-year to $4.14 and $6.22 million in 2021. It surpassed the Street’s EPS estimates in each of the trailing four quarters.
The company completed its InfinityLab Bio LC Portfolio, announcing the launch of three InfinityLab Bio LC systems specifically developed to meet the needs of the biopharma industry on June 22, 2021. Enabling seamless transfer of existing methods from both Agilent and non-Agilent LC systems, A is expected to witness increasing demand for its new instruments, columns, application kits, and supplies. The stock has soared 69.4% over the past year to close yesterday’s trading session at $146.67.
A’s POWR Ratings are consistent with this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. It has a B grade for Growth, Value, Stability, Sentiment and Quality. Click here to see A’s rating for Momentum as well.
A is ranked #3 out of 57 stocks in the Medical-Diagnostics/Research industry.
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BMY shares were trading at $66.18 per share on Friday afternoon, up $0.33 (+0.50%). Year-to-date, BMY has gained 7.52%, versus a 14.77% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand. More...
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