Healthcare Stocks Review

Why should we even talk about investing in healthcare companies? The healthcare sector is traditionally considered a safe haven. During periods of slowdown and recession, it is considered profitable to invest in shares of this sector. Let’s figure out how relevant this is today and whether VEEV stock or REGN stock can save our brokerage accounts if the S&P 500 starts to draw down.

Are there any reasons to expect the American stock market to fall? In addition to the fact that May will soon begin, a month associated with dramatic indices drops, there are several indirect signs of potential risk.
Firstly, the S&P500 is storming to new historical highs, showing an 8% gain in just the first quarter of the year. Judging by various measurements, investor optimism is only growing. Sometimes it leads to bubble formation and the subsequent collapse of quotes.
The market may remain irrational more than you are liquid, but the second factor, gold prices rise, is also alarming.

Gold has already risen by almost 13% since the beginning of the year, and such a trend is usually associated with a large capital changing allocation out of risky stocks in case the market falls.
There are also concerns that the Federal Reserve will not cut rates yet, and the market may react nervously to this. We are convinced that high rates are, in principle, very good for the whole economy. This means there are investment projects with higher returns and a healthy economy. However, in the current growth of the stock market, there are also expectations of a reduction in rates, and if this does not happen soon, a fall may begin.

One way or another, it is better to always be prepared for different scenarios. The healthcare sector is one of those whose stocks can become a haven for investors if market trends change. We want to demonstrate our analysis of the main companies in the sector and, since we make our investment decisions based on the the Eyestock Rating, it became the main criterion for selecting stocks for this article.

We’ve rounded up 20 stocks for you in a traditional stock pick here. We want to cover 6 of them in more detail. The entire healthcare sector is divided into 6 industries, and we will highlight the best companies of all, except for Health Care Providers & Services, where the best company in our opinion is UnitedHealth Group (UNH), but its rating is far from the benchmark of 100% and settled at 68% when assessing its finances.

Pharmaceuticals
Zoetis Inc (XNYS: ZTS) — Eyestock Rating 101%
market cap: $74.5B as of 2024-04-11

We recently covered the best pharma company in our opinion — Novo Nordisk (NVO). The best of the American equities according to our methodology is Zoetis. Zoetis is focused on the discovery, development, manufacture and commercialization of medicines, vaccines, diagnostic products and services for animal health. Since the company’s main segment is products for dogs and cats, your pet may have used it too!

The company’s revenue for 2023 amounted to $8.5 billion, 54% of which comes from the US Market, and the remaining 46% is fairly evenly distributed among 44 countries on all continents!

Zoetis has a rating of just above perfect condition at 101%, the first time it has ever been above the Eyestock benchmark score of 100%. Having excellent financial performance and profitability, the company shows solid sustainable growth rates and minor problems with its balance sheet are the only things that separate it from excellent ones. ZTS stocks have shown a serious decline this spring and the company is now trading around 30 P/E, which is below the lowest estimates over the last 5 years, meaning we at Eyestock consider it greatly undervalued with the potential to grow to average estimates as minimum 25% (as of 11 April).

Pharmaceuticals
Vertex Pharmaceuticals Inc (XNAS: VRTX) — Eyestock Rating 124%
market cap: $103B as of 2024-04-11

This is a more diversified business in the development and production of drugs for the treatment of serious diseases. The Boston-based company’s drug portfolio includes clinical programs for the treatment of cell disease, beta thalassemia, acute and neuropathic pain, type 1 diabetes and earlier-stage programs in diseases such as muscular dystrophies. However, the main product of a global biotechnology company is medicines that treat the underlying cause of cystic fibrosis.

Since 2018-06-30 VRTX stock has Eyestock rating above 100%. The company is extremely solvent, liquid and profitable. However, it is characterized by a common characteristic of all biotechs — low-growth sustainability. This is because biotech is more cyclical and is very much associated with the stages of introducing new drugs and the risk of products not being approved by the FDA (US Food and Drug Administration).

VRTX share has a Beta of 0.4 which means it is less volatile than the broader market and could be a great idea for a market slowdown period but now the current price is 29% higher than its minimum value and 14% higher than its average value as of 11 April.

Regeneron Pharmaceuticals Inc (XNAS: REGN) — Eyestock Rating 104%
market cap: $99B as of 2024-04-11

A comparable company in the market cap with a similarly diversified but distinct portfolio of pharmaceuticals with a focus on eye diseases, allergies, cancer, cardiovascular and metabolic diseases. Regeneron is mostly known for its effective anti-Covid cocktail, which made a splash in 2021 and contributed to the financial success of the corporation. Regeneron has all the same things that we wrote about Vertex. But we couldn’t resist mentioning this equity because outside of analytics and writing articles, the one actually found its way into our portfolios in early 2021 when it was at its P/E valuation minimum, trading below $455 per share. Since then, it has doubled and is now even higher than its maximum estimates, which for a moment are only 25 price-to-earnings ratio. A beta of just 0.1 forces us to continue to hold this position in our portfolios. We wrote about how to use beta knowledge here. Get acquainted.

However, when investing in biotechnology, always understand the company’s activities in detail and be aware of the significant risks and high turbulence inherent in this sector. To be completely honest, the level of drive that can be experienced by holding shares of a biotech company in anticipation of an FDA can be illustrated by the price chart of another representative of the industry — Biogen (BIIB). Just be theoretically prepared for this.

Health Care Technology
Veeva Systems Inc (XNYS: VEEV) — Eyestock Rating 123%
market cap: $34B as of 2024-04-11

A good opportunity to invest in a less volatile industry is by purchasing VEEV shares. Veeva provides cloud solutions for the global life sciences industry: data processing, analytics, and CRM systems. That is, in fact, the company works at the intersection of healthcare and information technologies. Low return on equity of 11% and relatively weak sustainability of net income growth were beaten by the high level of other metrics we use at Eyestock when forming a final rating of 123%, which with a 99.9% probability will remain in the next quarter as high as now (forecast based on an AI model). The main thing is that VEEV is trading below the average P/E ratio level for the last 5 years and is undervalued now by Eyestock methodology having an upside of 30% to the median price-to-earnings level.

Two more stocks in our research have a beta greater than 1 so they they most likely cannot be considered as a lifeline in case the entire market falls. But could be attractive to those who are interested in the healthcare sector as well.

Health Care Equipment
IDEXX Laboratories Inc (XNAS: IDXX) — Eyestock Rating 109%
market cap: $41.8B as of 2024-04-11

IDEXX Laboratories, Inc. develops, manufactures and distributes medical devices and provides services for the companion animal veterinary, livestock and poultry, dairy and water testing markets. It also offers human medical point-of-care and laboratory diagnostics. The Company has sales offices outside the United States in all regions, including Africa, Asia Pacific, Canada, Europe, the Middle East, and Latin America. While more stable in terms of net profit growth, IDXX stock is less predictable in terms of total rating. The AI model signals that the probability of maintaining a high rating in the next period is only 25%.

Life Sciences Tools & Services
Medpace Holdings Inc (XNAS: MEDP) — Eyestock Rating 124%
market cap: $12.4B as of 2024-04-11

The smallest representative in our sample in terms of market cap, however, it is also a Large cap. Medpace is focused on providing scientifically-driven outsourced clinical development services to the biotechnology, pharmaceutical and medical device industries. The firm’s drug development services focus on full-service Phase I-IV clinical development services and include development plan design, coordinated central laboratory, project management, regulatory affairs, clinical monitoring, data management and analysis, pharmacovigilance new drug application submissions, and post-marketing clinical support. Unlike true biotech companies, MEDP stocks have a high level of sustainable net profit growth.

This is probably why the company is one of the most expensive along with Regeneron on our list, having virtually no profit potential for short- and medium-term private investors.

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