Inflationary pressure continues to weigh on the economy. The September Consumer Price Index (CPI) increased 8.2% year-over-year, beating estimates. And the Fed’s quest to bring down inflation with aggressive rate hikes is increasing recession worries.

Medical stocks tend to help investors hedge against economic downturns. Demand for medical services remains stable despite economic turbulence. Till 2021, the total global pharmaceutical market was valued at about $1.42 trillion. Moreover, an aging population and rising chronic diseases should continue to boost demand in the coming years.

Furthermore, according to The Business Research Company, the healthcare services market is expected to reach $9.70 trillion by 2023.

Given the backdrop, investors could consider buying fundamentally sound medical stocks Johnson & Johnson (JNJ) and Bristol-Myers Squibb Company (BMY), which seem poised for a bull run in Q4.

Johnson & Johnson (JNJ)

JNJ and its subsidiaries research and develop, manufacture, and sell various products in the healthcare field worldwide. The company operates through three segments: Consumer Health; Pharmaceutical; and Medical Devices.

On September 20, 2022, JNJ opened its San Francisco Bay Campus, a state-of-the-art Research & Development (R&D) facility in the Bay Area. This center is expected to boost its research in the field of medical sciences.

JNJ’s total sales increased 1.9% year-over-year to $23.79 billion for the third quarter ended 2022.  Moreover, its net earnings came in at $4.46 billion, up 21.6% year-over-year. Also, its EPS came in at $1.68, up 22.6% year-over-year.

JNJ’s revenue is expected to increase by 3% year-over-year to $98 billion in 2023. Its EPS is expected to grow 3.8% year-over-year to $10.42 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained marginally to close the last trading session at $165.11.

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

JNJ has an A grade for Stability and a B for Quality. In the Medical – Pharmaceuticals industry, it is ranked #5 out of 161 stocks. Click here for the additional POWR Ratings for Value, Sentiment, Growth, and Momentum for JNJ.

Bristol-Myers Squibb Company (BMY)

BMY engages in the discovery, development, licensing, manufacture, and sale of biopharmaceutical products globally. The company’s offerings include products for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and COVID-19 diseases.

On October 4, BMY and Autolus Therapeutics plc (AUTL), a biopharmaceutical company, entered into an agreement granting BMY access to Autolus’ proprietary safety switch system, which will support cell therapy programs for the treatment of cancer. This should help BMY advance in cancer research and treatment.

In addition, on September 16, BMY received approval from the European Commission for the LAG-3-blocking antibody combination, Opdualag, to treat unresectable or metastatic melanoma with tumor cell PD-L1 Expression < 1%. This approval could be a game changer in the treatment of melanoma.

BMY’s total revenues came in at $11.89 billion for the second quarter ended July 2, 2022, increased marginally year-over-year. Its net earnings came in at $1.42 billion, up 34.7% year-over-year. Also, its EPS came in at $0.66, up 40.4% year-over-year.

BMY’s revenue is expected to increase by 3.2% year-over-year to $47.5 billion in 2023. Its EPS is expected to grow 5.9% year-over-year to $7.95 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 21.2% to close the last trading session at $70.35.

BMY has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It also has an A grade for Value and a B for Growth and Quality. It is ranked #3 in the same industry.

Beyond what is stated above, we’ve also rated BMY for Sentiment, Stability, and Momentum. Get all BMY ratings here.

JNJ shares were trading at $168.69 per share on Friday afternoon, up $3.58 (+2.17%). Year-to-date, JNJ has gained 0.55%, versus a -20.60% rise in the benchmark S&P 500 index during the same period.

About the Author: Rashmi Kumari

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...

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