The stock market has been under pressure amid the Federal Reserve’s impending interest rate increases and sky-high inflation. According to the Conference Board, its consumer confidence index slid to 106.4 in May from 108.6 in April. However, defensive sectors like healthcare tend to deliver stable returns despite pullbacks because of the relatively inelastic demand for their goods and services.

Furthermore, the resurgence of the COVID-19 cases is expected to keep the healthcare industry in the limelight in the near term. Because global demand for healthcare goods and services is surging, investors are expected to increasingly defend their portfolios against the market’s fluctuations with healthcare stocks that are financially robust and are well positioned to withstand volatility. Investors’ interest in the healthcare industry is evident in the Health Care Select Sector SPDR’s (XLV) marginal gains over the past six months compared to the SPDR S&P 500 Trust ETF’s (SPY) 9.4% decline.

Given this backdrop, we think the stocks of fundamentally strong healthcare companies Cigna Corporation (CI), Organon & Co. (OGN), and Bristol-Myers Squibb Company (BMY), which have been gaining in price despite the market downtrend, could be ideal bets now.

Click here to checkout our Healthcare Sector Report for 2022

Cigna Corporation (CI)

CI in Bloomfield, Conn., provides insurance and related products and services in the United States. Its segments are Evernorth and Cigna Healthcare. The company also offers permanent insurance contracts and distributes its products and services through insurance brokers and consultants.

On May 6, 2022, David M. Cordani, chairman and CEO, said, “We’ve had a strong start to the year as we advance our growth strategy and support the health and well-being of our clients and customers.”

CI’s adjusted revenues have increased 7.6% year-over-year to $44.11 billion for the first quarter, ended March 31, 2022. Its adjusted income from operations came in at $1.93 billion, up 16% year-over-year. Also, its adjusted EPS was $6.01, up 27% year-over-year.

Analysts expect CI’s revenue to increase 4.7% year-over-year to $186.79 billion in 2023. Its EPS is estimated to grow 11.2% per annum for the next five years. It surpassed EPS estimates in each of the trailing four quarters. The stock has gained 39.8% in price over the past six months to close yesterday’s session at $268.29.

CI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

It has a B grade for Growth, Value, Stability, Sentiment, and Quality. Within the A-rated Medical – Health Insurance industry, CI is ranked #2 out of 11 stocks. Click here to see the additional POWR Ratings for Momentum for CI.

Organon & Co. (OGN)

Health care company OGN in Jersey City, N.J., develops and delivers health solutions through a portfolio of prescription therapies in the United States and internationally. The company has a portfolio of more than 60 medicines and products across a range of therapeutic areas.

On May 5, 2022, Kevin Ali, OGN’s CEO, said, “We continued to expand our Women’s Health offerings by acquiring the rights to Marvelon™ (ethinylestradiol, desogestrel) and Mercilon™ (ethinylestradiol, desogestrel) in certain markets, as well as by entering into a licensing agreement to commercialize XaciatoTM (clindamycin phosphate) vaginal gel.” 

OGN’s revenues for the first quarter, ended March 31, 2022, came in at $1.57 billion compared to $1.51 billion in the year-ago period. Its non-GAAP gross profit was $1.04 billion, up 11.2% year-over-year. And its adjusted EBITDA increased 14.3% year-over-year to $647 million.

For its fiscal 2023, analysts expect OGN’s revenue to increase 2.7% year-over-year to $6.41 billion. Its EPS is estimated to grow 7.1% year-over-year to $5.77 in the same period. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 29.9% in price to close yesterday’s trading session at $37.96.

OGN has an overall B rating, which indicates a Buy in our proprietary rating system.

It has an A grade for Value. Within the Medical – Pharmaceuticals industry, it is ranked #25 out of 166 stocks. Click here to see the additional POWR Ratings for Growth, Momentum, Stability, Sentiment, and Quality for OGN.

Bristol-Myers Squibb Company (BMY)

New York City’s BMY discovers, develops, licenses, manufactures, and markets biopharmaceutical products worldwide. It offers products for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and covid-19 diseases.

On April 29, 2022, Giovanni Caforio, M.D., board chair and CEO of BMY, said, “Thanks to our team’s hard work and dedication, we achieved regulatory approvals of Opdualag and Camzyos, our new first-in-class medicines for patients living with metastatic melanoma and symptomatic obstructive hypertrophic cardiomyopathy, respectively.”

For the first quarter, ended March 31, 2022, BMY’s total revenues came in at $11.65 billion, up 5.2% year-over-year. Its non-GAAP gross profit was $9.23 billion, up 6.7% year-over-year. Furthermore, its non-GAAP net earnings came in at $4.25 billion, up 7.1% year-over-year, while its non-GAAP EPS came in at $1.96, up 12.6% year-over-year.

BMY’s revenue is expected to increase 4% year-over-year to $48.30 billion in 2023, while its EPS is expected to grow 7.3% year-over-year to $8.13. It surpassed EPS estimates in each of the four trailing quarters. The stock has gained 40.7% in price over the past six months to close yesterday’s session at $75.45.

BMY’s POWR Ratings reflect its promising outlook. It has an overall A rating, representing a Strong Buy in our POWR Rating system.

BMY has an A grade for Value and a B grade for Growth and Quality. It is ranked #4 in the Medical – Health Insurance industry. Click here to see the additional POWR Ratings for BMY (Momentum, Stability, and Sentiment). 

Click here to checkout our Healthcare Sector Report for 2022

CI shares were unchanged in premarket trading Wednesday. Year-to-date, CI has gained 17.39%, versus a -12.79% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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