Investing in the healthcare sector has been driven by momentum since the Covid-19 pandemic arrived. With global health a key item on every political agenda, it’s obvious why.
Healthcare can be a lucrative investment area, but it’s also a challenging sector to invest in. It is burdened with regulatory scrutiny and long periods of research and development.
With an altruistic desire to help people, it can be easy to fall for a promising-sounding healthcare stock bringing hope. Unfortunately, the healthcare sector is rife with speculative ventures, and it pays to be diligent.
Key industry players in the US healthcare sector include:
CVS Health Corporation (NYSE: CVS)
UnitedHealth Group Incorporated (NYSE: UNH)
McKesson Corporation (NYSE: MCK)
AmerisourceBergen Corporation (NYSE: ABC)
Anthem, Inc. (NYSE: ANTM)
Centene Corporation (NYSE: CNC)
Johnson & Johnson (NYSE: JNJ)
Momentum-driven healthcare stocks by EPS for Q3 2021
EPS stands for earnings per share. It is a financial ratio relating the earnings generated by the business to the number of shares in issue.
The EPS refers to earnings generated during a specific time frame.
EPS growth can be a sign that a company is growing profits. However, a rising EPS on its own does not guarantee a lucrative investment. That’s because share buybacks will reduce shares in issue and boost the EPS.
The following healthcare stocks are showing momentum in EPS growth:
Avantor
Avantor (NASDAQ: AVTR) provides mission-critical products and services to customers in the biopharma, healthcare, education & government, and advanced technologies & applied materials industries.
AVTR has a $22.7bn market cap, total debt is $5.6bn, while cash and equivalents are $223m. Meanwhile, the short interest on this stock is 3%. Avantor has a forward P/E of 27.9.
AVTR displays EPS growth of 209% TTM, and its 2021 consensus average EPS forecast is $1.3. Analyst consensus on this stock is a 12-month average share price target of $42.7. That gives a potential 9.7% upside. AVTR stock appears in 98 exchange-traded funds (ETFs).
Merit Medical Systems Inc
Merit Medical Systems Inc (NASDAQ: MMSI) manufactures and markets disposable medical devices for cardiology and endoscopy.
MMSI has a $3.7bn market cap, total debt is $372.8m, while cash and equivalents are $69.6m. Meanwhile, the short interest on this stock is 3.2%.
Merit Medical Systems Inc has a forward P/E of 31. It also displays EPS growth of 437% TTM. Analyst consensus on this stock is a 12-month average share price target of $76. That gives a potential 13% upside. MMSI stock appears in 85 exchange-traded funds (ETFs).
Modivcare Inc
Modivcare Inc (NASDAQ: MODV) is a tech healthcare services company.
MODV has a $2.5bn market cap. Total debt is $528.6m, while cash and equivalents are $290.9m. Meanwhile, the short interest on this stock is 2%. Modivcare has a forward P/E of 30.7. It doesn’t offer shareholders a dividend.
MODV displays EPS growth of 1,922% TTM, and its 2021 consensus average EPS forecast is $6.82. Analyst consensus on this stock is a 12-month average share price target of $221.67. That gives a potential 23% upside. MODV stock appears in 93 exchange-traded funds (ETFs).
Iqvia Holdings Inc
Iqvia Holdings Inc (NYSE: IQV) provides advanced analytics, technology solutions, and clinical research services to the life sciences industry.
IQV has a $48.9bn market cap, total debt is $12.6bn, while cash and equivalents are $1.9bn. Meanwhile, the short interest on this stock is 1.2%. Iqvia Holdings Inc has a forward P/E of 27.3.
IQV displays EPS growth of 221% TTM, and its 2021 consensus average EPS forecast is $8.80. Analyst consensus on this stock is a 12-month average share price target of $275.67. That gives a potential 7.7% upside. IQV stock appears in 175 exchange-traded funds (ETFs).
Momentum-driven healthcare stocks by sales growth for Q3 2021
Sales growth is an important financial metric for any business to track. If sales are increasing, the company should be thriving, whereas if sales are declining, the business may be in trouble.
To calculate the sales growth rate year-over-year, simply divide the current sales by the prior year’s sales.
Sales growth = this year’s sales / last year’s sales.
The following healthcare stocks are showing momentum in sales growth:
Inmode
Inmode (NASDAQ: INMD) is a leading Israeli provider of innovative medical technologies with an international reach.
INMD has a $4.1bn market cap, total debt is $3.7m, while cash and equivalents are $332m. Meanwhile, the short interest on this stock is 5.6%. Inmode has a forward P/E of 29.9.
INMD displays EPS growth of 144% TTM, and its 2021 consensus average EPS forecast is $3.27. Analyst consensus on this stock is a 12-month average share price target of $123.8. That gives a potential 12% upside.
INMD stock appears in 21 exchange-traded funds (ETFs). Inmode is showing sales growth of 81% TTM.
Laboratory of America Holdings
Laboratory of America Holdings (NYSE: LH) is an international clinical laboratory company with diagnostics and drug development divisions.
LH has a $29.6bn market cap, total debt is $6.36bn, while cash and equivalents are $1.96bn. Meanwhile, the short interest on this stock is 1.5%. Laboratory of America Holdings has a forward P/E of 18.2.
LH displays EPS growth of 327% TTM, and its 2021 consensus average EPS forecast is $23.4. Analyst consensus on this stock is a 12-month average share price target of $310.29. That gives a potential 1.5% upside.
LH stock appears in 206 exchange-traded funds (ETFs). Laboratory of America Holdings is showing sales growth of 42.8% TTM.
Conformis Inc
Conformis Inc (NASDAQ: CFMS) is a medical technology company manufacturing joint replacement implants.
CFMS has a $247m market cap, total debt is $29.5m, while cash and equivalents are $108m. Meanwhile, the short interest on this stock is 2.4%.
Analyst consensus on this stock is a 12-month average share price target of $2.33. That gives a potential 64% upside. CFMS stock appears in 7 exchange-traded funds (ETFs). Conformis is showing sales growth of 40% TTM.
Looking to the future
The global healthcare market is changing rapidly due to the Covid-19 pandemic. According to financial advisory firm Deloitte, the 2021 global health care outlook is accelerating industry change:
The COVID-19 pandemic is placing enormous strain on the global health care sector’s workforce, infrastructure, and supply chain, and exposing social inequities in health and care. COVID-19 is also accelerating change across the ecosystem and forcing public and private health systems to adapt and innovate in a short period.
Health care spending is expected to rise at a CAGR of 4% between 2020 and 2024, up from 2.8% in the four prior years.
Some of the factors affecting higher health care spending include:
An aging population
Increasing demand for care
Gradual economic recovery on a country by country basis
Clinical and technological advances
Labor costs
Expanding public health care systems
Meanwhile, Mutaz Shegewi, research director, IDC Health Insights, said:
“The transformation taking shape in the new normal and journey that lays ahead toward the next normal presents with it many emerging opportunities, challenges, use cases, and lessons that will fast-forward healthcare and life sciences into an entirely unforeseen future.”
