The omicron variant is wreaking havoc globally, with an increasing number of cases being registered daily. As a result, the healthcare industry is expected to again be in the limelight in the coming few months. Moreover, digital healthcare is witnessing surging demand worldwide. According to a Forbes report, the ESG sector, Telemedicine & Digital Care Solutions are the major factors that will drive the growth of the healthcare industry in 2022. 

Investors’ interest in the healthcare industry is evident in the Health Care Select Sector SPDR Fund’s (XLV) 3% returns in the past month and 7.3% returns in the past three months.

So, we think it could be wise to bet on fundamentally sound healthcare stocks Medtronic plc (MDT), Zimmer Biomet Holdings, Inc. (ZBH), and Incyte Corporation (INCY).

Click here to checkout our Healthcare Sector Report

Medtronic plc (MDT)

Headquartered in Dublin, Ireland, MDT develops, manufactures, distributes, and sells device-based medical therapies to hospitals, physicians, clinicians, and patients worldwide. It operates through four segments: Cardiovascular Portfolio; Neuroscience Portfolio; Medical Surgical Portfolio; and Diabetes Operating Unit.

On Nov.23, 2021, Geoff Martha, MDT chairman and CEO, said, “During the quarter, we continued to advance our pipeline, launched new products, and grew share in the majority of our businesses. Looking ahead, as our markets recover, Medtronic is one of the best positioned companies in healthcare. We have an expansive pipeline of leading technology, a robust balance sheet, and an expanding roster of proven top talent. Coupled with our revitalized operating model and new competitive mindset, we’re poised to accelerate and sustain growth.”

MDT’s net sales increased 2.6% year-over-year to $7.85 billion in its fiscal 2022 second quarter, ended Oct. 29, 2021. Its net income was  $1.32 billion, up 166.6% year-over-year. And its EPS came in at $0.97, up 169.4% year-over-year.

Analysts expect MDT’s revenue and EPS to increase 7.4% and 28.2%, respectively, year-over-year to $32.35 billion and $5.69for fiscal 2022. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. The stock closed yesterday’s trading session at $104.97. Wall Street analysts expect the stock to hit $131.47 in the near term, which indicates a potential 25.3% upside.

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

MDT has a B grade for Growth, Value, and Stability. Within the Medical – Devices & Equipment industry, it is ranked #18 of 168 stocks. Click here to see the additional POWR Ratings for Momentum, Sentiment, and Quality for MDT.

Zimmer Biomet Holdings, Inc. (ZBH)

ZBH in Warsaw, Ind., together with its subsidiaries, designs, manufactures, and markets musculoskeletal healthcare products and solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. 

On Nov.4, 2021, Bryan Hanson, Chairman, President and CEO of ZBH, said, “Our underlying business remains strong, fueled by our transformation and the launch of new innovative products that can make a difference for our customers and for patients.  I continue to be incredibly proud of our team for their dedication, resilience and performance during this challenging time.”

ZBH’s cash and cash equivalents came in at $919.6 million for the period ended Sept.30, 2021, versus $802.1 million for the period ended Dec.31, 2020. Its other assets came in at $1.01 billion, compared to $969.4 million for the same period. Also, its current liabilities were  $1.89 billion, compared to $2.06 billion for the same period.

For its fiscal 2021, ZBH’s revenue and EPS are expected to grow 12% and 30.5%, respectively, year-over-year to $7.87 billion and $7.4It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past month, the stock gained 2.7% in price to close yesterday’s session at $128.93. Wall Street analysts expect the stock to hit $163.20 in price in the near term, which indicates a potential 26.6% upside.

ZBH’s strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.

In addition, it has a B grade for Value. ZBH is ranked #41 in the Medical – Devices & Equipment industry. Click here to see the additional POWR Ratings for ZBH (Growth, Momentum, Stability, Sentiment, and Quality).

Incyte Corporation (INCY)

INCY is a biopharmaceutical company that is focused on discovering, developing, and commercializing proprietary therapeutics in the U.S. and internationally. Its offerings include JAKAFI, PEMAZYRE, and ICLUSIG. In addition, it has a portfolio of selective Janus-associated kinases 1 (JAK1) inhibitors. INCY is headquartered in Wilmington, Delaware.

On Nov. 2, 2021, Hervé Hoppenot, CEO, INCY, said, “Multiple product approvals and global launches have significantly expanded our portfolio; our robust development pipeline continues to mature and progress; and we expect several additional regulatory submissions to occur over the coming months.”

For the third quarter, ended Sept.30, 2021, INCY’s revenue increased 31% year-over-year to $812.99 million. The company’s non-GAAP net income came in at $261.82 million, up 423% year-over-year. And its non-GAAP EPS was $1.18, up 413% year-over-year.

INCY’s revenue is expected to be $2.93 billion in fiscal 2021, representing a 9.8% year-over-year rise. The company’s EPS is expected to increase 933.3% year-over-year to $3.5 in fiscal 2021. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters.

The stock has gained 11.7% in price to close yesterday’s trading session at $72.63. Wall Street analysts expect the stock to hit $97.50 in the near term, which indicates a potential 34.2% upside.

INCY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system.

INCY has an A grade for Quality and a B grade for Value and Sentiment. Within the Biotech industry, it is ranked #11 of 473 stocks. Click here to see the additional POWR Ratings for Growth, Momentum, and Stability for INCY.

Click here to checkout our Healthcare Sector Report  

MDT shares were trading at $105.20 per share on Friday afternoon, up $0.23 (+0.22%). Year-to-date, MDT has gained 1.69%, versus a -1.70% 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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