With nearly 60% of adult Americans suffering from at least one chronic disease, the healthcare sector sees significant demand. Moreover, a rise in the aging population and increased health awareness amongst the masses is boding well for the industry. The global pharmaceuticals market is expected to reach $2.14 trillion by 2026, expanding at a 7.7% CAGR.
Additionally, rapid digital transformation in the healthcare delivery model with the expansion of virtual health services like telehealth and telemedicine should significantly contribute to the industry’s growth.
Given the backdrop, we think investors should consider adding healthcare stocks, Johnson & Johnson (JNJ), Pfizer Inc. (PFE), Novo Nordisk A/S (NVO), Bristol-Myers Squibb Company (BMY), and GSK plc (GSK) to their portfolios now. These stocks are rated Strong Buy in our proprietary POWR Ratings system.
Johnson & Johnson (JNJ)
JNJ is engaged in the research and development, manufacture, and sale of a range of products in the healthcare field. It operates through three segments Consumer; Pharmaceutical; and Medical Devices.
On June 20, JNJ announced the launch of the new J&J Satellite Center for Global Health Discovery at Singapore’s Duke-NUS Medical School. The company expects this first J&J center in the Asia-Pacific region to drive new solutions for flaviviruses by bringing together the talent and expertise of the world’s largest healthcare company with that of a leading academic institution.
JNJ’s sales increased 3% year-over-year to $24.02 billion in the fiscal second quarter of 2022. Its non-GAAP net earnings grew 4.3% from the year-ago value to $6.91 billion, while its non-GAAP EPS improved 4.4% year-over-year to $2.59.
Analysts expect JNJ’s revenue for the fiscal year ending December 2022 to come in at $95.53 billion, indicating an increase of 1.9% year-over-year. The company’s EPS is expected to grow 2.8% year-over-year to $10.08 in the same period. JNJ also has an impressive earnings surprise history as it beat the consensus EPS estimates in each of the trailing four quarters.
JNJ has slumped marginally intraday to close the last trading session at $165.64.
JNJ’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
JNJ also has an A grade in Stability and a B in Quality, Growth, and Value. It is ranked #1 of 168 stocks in the Medical – Pharmaceuticals industry.
Beyond what is stated above, we’ve also rated JNJ for Sentiment and Momentum. Get all JNJ ratings here.
Pfizer Inc. (PFE)
PFE, a research-based global company, engages in the development, manufacturing, marketing, sales, and distribution of biopharmaceutical products. The company’s global portfolio includes medicines and vaccines.
On September 12, PFE and BioNTech SE (BNTX) announced the recommendation of a 30-µg booster dose of their Omicron BA.4/BA.5 bivalent-adapted COVID-19 Vaccine for conditional marketing authorization (cMA) by the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP), for individuals 12 years and older. If approved for commercialization, this should garner significant returns amid the prevalent covid crisis.
In the same month, PFE announced the U.S. Food and Drug Administration (FDA) accepted the filing of a New Drug Application (NDA) for ritlecitinib in people 12 years of age and older with alopecia areata and is expected to decide in the second-quarter 2023. It should become a new important treatment option for alopecia patients if approved.
For the fiscal second quarter of 2022, PFE’s revenues increased 46.8% year-over-year to $27.74 billion. Its adjusted net income grew 93.5% from the year-ago value to $11.66 billion, while its adjusted EPS stood at $2.04, reflecting a 92.5% increase year-over-year.
The consensus EPS estimate of $6.49 for the ongoing fiscal year represents a 46.9% improvement year-over-year. The consensus revenue estimate of $101.79 billion for the same period represents a 25.1% year-over-year increase.
The stock has gained 4.8% over the past year to close the last trading session at $47.76.
It is no surprise that the stock has an overall A rating, translating to Strong Buy in our POWR Ratings system. PFE also has an A grade in Value and a B in Sentiment and Quality. It is ranked #7 in the same industry.
Click here to get additional POWR Ratings for Momentum, Growth, and Stability for PFE.
Novo Nordisk A/S (NVO)
Headquartered in Bagsvaerd, Denmark, NVO, a healthcare company, engages in researching, developing, manufacturing, and marketing pharmaceutical products worldwide. It operates in two segments Diabetes and Obesity care and Biopharm.
On September 12, NVO and Microsoft Corp. (MSFT) entered a new strategic collaboration to combine MSFT’s computational services, cloud and artificial intelligence (AI) technology, and expertise with NVO’s drug discovery, development, and data science capabilities to accelerate the company’s R&D.
“Together, we are on a path to enable faster and scaled use of AI in drug discovery, ultimately leading to more breakthrough innovations, and efficiency gain to better serve the needs of patients,” said Lars Fogh Iversen, senior vice president, Digital Science & Innovation at Novo Nordisk.
On September 1, NVO announced its agreement to acquire Forma Therapeutics Holdings Inc. (FMTX), a clinical-stage biopharmaceutical company focused on transforming the lives of patients with sickle cell disease (SCD) and rare blood disorders; for an equity valuation of $1.1 billion. This is expected to help NVO enhance its sickle cell disease pipeline, which should be strategically beneficial.
NVO’s net sales increased 25% year-over-year to DKK83.30 billion ($11.19 billion) in the six months ended June 30, 2022. Its operating profit improved 26% year-over-year to DKK37.54 billion ($5.04 billion) over the period, while its net profit increased 11% from its year-ago value to DKK27.53 billion ($3.70 billion). The company’s EPS was DKK12.08, up 13% over the period.
NVO’s revenue for the fiscal quarter ending September 2022 is expected to come in at $5.87 billion, indicating a 5.6% year-over-year growth. The company’s EPS is expected to increase 4.5% year-over-year to $0.86 in the same period.
NVO’s shares have gained 9.8% over the past year to close the last trading session at $109.33.
NVO’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to Strong Buy in our rating system. The company also has an A grade in Quality and a B in Value and Stability. In the Medical – Pharmaceuticals industry, it is ranked #5.
To get NVO’s ratings for Growth, Sentiment, and Momentum, click here.
Bristol-Myers Squibb Company (BMY)
BMY discovers, develops, licenses, and markets biopharmaceutical products worldwide. It offers products for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and covid-19 diseases.
BMY’s total revenues increased 2% year-over-year to $11.89 billion in the fiscal second quarter ended June 30, 2022. EBIT came in at $1.96 billion, up 26.1% year-over-year, while its net earnings grew 34.7% from the year-ago value to $1.43 billion. The company’s EPS grew 40.4% from the prior-year quarter to $0.66 in the same period.
Street expects BMY’s revenue for the fiscal quarter ending March 2023 to come in at $11.76 billion, indicating an increase of 1% year-over-year. Also, the company’s EPS is expected to grow 7% year-over-year to $2.10 in the same period. BMY beat the consensus EPS estimates in all the trailing four quarters.
BMY gained 28.4% over the past nine months to close the last trading session at $72.36.
BMY’s strong fundamentals reflect this promising outlook. The stock has an overall rating of A, equating to Strong Buy in our POWR Ratings system. BMY also has an A grade in Value and a B in Growth and Quality. The stock is ranked #4 in the Medical – Pharmaceuticals industry.
We’ve also rated BMY for Stability, Sentiment, and Momentum. Get all BMY ratings here.
GSK plc (GSK)
Headquartered in Brentford, United Kingdom, GSK engages in manufacturing, and marketing pharmaceutical products, vaccines, over-the-counter medicines, and health-related consumer products. It operates through four segments- Pharmaceuticals; Pharmaceuticals R&D; Vaccines; and Consumer Healthcare.
On July 27, GSK announced that the US FDA approved Benlysta (belimumab) for treating active lupus nephritis (LN) in children aged 5 to 17. This first-ever FDA-approved treatment for pediatric LN marks a significant step in providing treatment to children at risk of early kidney damage.
For the fiscal second quarter of 2022, GSK’s continuing operations turnover increased 19% year-over-year to £6.93 billion ($7.10 billion). Its gross profit grew 15% from the year-ago value to £4.75 billion ($4.87 billion). Adjusted operating profit for the quarter stood at £2.01 billion ($2.06 billion), reflecting a 22% increase year-over-year.
GSK’s EPS for the fiscal year ending December 2023 is expected to come in at $3.35, reflecting an increase of 5.4% year-over-year. The consensus revenue estimate of $34.64 billion for the same period represents a 3.4% increase year-over-year. The company also surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 1.8% intraday to close the last trading session at $32.45.
The company has an overall rating of A, translating to Strong Buy in our proprietary rating system. GSK also has an A grade in Value and a B in Quality. Out of the 168 stocks in the same industry, it is ranked #16.
Click here for additional POWR Ratings for Sentiment, Stability, Growth, and Momentum for GSK.
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JNJ shares were trading at $162.65 per share on Tuesday morning, down $2.99 (-1.81%). Year-to-date, JNJ has declined -3.05%, versus a -15.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...
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