The COVID-19 global, public healthcare crisis has highlighted the healthcare sector’s importance and driven up the prices of several stocks in the space. Government efforts worldwide to vaccinate their countries’ populations against the virus should help the healthcare sector thrive for the foreseeable future. Furthermore, the sector is well-positioned to grow in the long run with increasing investments and research breakthroughs for treating several chronic diseases.
Moreover, the industry is expected to grow with the rising healthcare needs of an aging population. According to Statista, the United States is expected to have spent 18% of its gross domestic product on healthcare in 2020, a spending level that is likely to increase this year and beyond.
So, we think it could be wise to add quality healthcare stocks UnitedHealth Group Incorporated (UNH) and Agilent Technologies, Inc. (A) to one’s portfolio now. These companies’ shares are trading below their 52-week highs but have significant upside potential. Furthermore, these stocks are rated ‘A’ (Strong Buy) in our POWR Ratings system.
UnitedHealth Group Incorporated (UNH)
Diversified health care company UNH in Minnetonka, Minn., operates through four segments: UnitedHealthcare, OptumHealth, OptumInsight, and OptumRx. The company is committed to building a compassionate and patient-centered health system that ensures every person has access to affordable and high-quality health care.
On October 01, 2021, UNH introduced its 2022 Medicare Advantage and prescription drug plans that offer expanded access to plans with differentiated value, simple and affordable benefit designs, and an unparalleled member experience. The plans could increase the company’s sales in the coming months.
For the second quarter, ended June 30, 2021, UNH’s total revenues increased 14.8% year-over-year to $71.32 billion. Its revenue from its Optum segment came in at $38.3 billion, up 17.2% year-over-year. The company’s total assets were $210.29 billion for the period ended June 30, 2021, versus $197.29 billion for the period ended December 31, 2020, while its cash and short-term investments came in at $22.56 billion, compared to $19.78 billion for the same period.
Analysts expect UNH’s EPS to be $21.6 in the next year, representing a 15.2% year-over-year increase. The company’s revenue is expected to rise 8.1% year-over-year to $307.01 billion in its fiscal year 2022. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained more than 25%. It is currently trading more than 5% below its 52-week high of $431.36, which it hit on August 20, 2021.
UNH’s POWR Ratings reflect its solid prospects. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. The company has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
In addition, it has a B grade for Stability, Sentiment, and Quality. UNH is ranked #1 of 11 stocks in the Medical – Health Insurance industry. Click here to see the additional POWR Ratings for UNH (Growth, Value, and Momentum).
Agilent Technologies, Inc. (A)
A provides application-focused solutions to the life sciences, diagnostics and genomics, chemical analysis, communications, and electronics industries worldwide. The Santa Clara, Calif.-based company functions primarily through Applied Markets, Diagnostics, Genomics, and Agilent CrossLab segments.
A signed a worldwide distribution agreement with Visiopharm on September 2, enabling it to co-market Visiopharm’s portfolio of CE-IVD marked AI-driven precision pathology software. The agreement might help in expanding the company’s product portfolio.
A’s net revenue increased 25.8% year-over-year to $1.59 billion in its fiscal third quarter, ended July 31, 2021. Its income from operations came in at $336 million, up 46.1% year-over-year. While its non-GAAP net income increased 38.7% year-over-year to $337 million, its non-GAAP EPS came in at $1.10, up 41% year-over-year.
Analysts expect A’s revenue and EPS to increase 7.3% and 13.5%, respectively, year-over-year to $5.95 billion and $4.21 in its fiscal year 2022. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained approximately 20% in price. It is currently trading more than 15% below its 52-week high of $179.57, which it hit on September 3, 2021.
A’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.
A has a B grade for Value, Growth, Stability, Sentiment, and Quality. Within the Medical-Diagnostics/Research industry, it is ranked #2 out of 56 stocks. Click here to see the additional POWR Rating for Momentum for A.
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UNH shares were trading at $404.81 per share on Wednesday afternoon, up $1.57 (+0.39%). Year-to-date, UNH has gained 16.68%, versus a 17.53% 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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