The healthcare industry is experiencing robust growth driven by advancements in medical technology, increasing demand for personalized care, and a growing aging population. These factors are converging to propel innovation in treatments, diagnostics, and patient care, reshaping the healthcare landscape.
To capitalize on the industry’s expansion prospects, it could be wise to invest in fundamentally sound healthcare stocks UnitedHealth Group Incorporated (UNH), Merck & Co., Inc. (MRK), and Pfizer Inc. (PFE) that seem well-positioned for significant gains this year.
The healthcare sector is experiencing robust growth, fueled by substantial investments in pharmaceutical sciences aimed at addressing global health challenges. As new, more dangerous chronic diseases emerge, the demand for innovative treatments seems to be on the rise.
That being said, the U.S. Food and Drug Administration’s approval of 29 new drugs this year for various chronic conditions highlights the sector’s potential for growth and its ongoing commitment to improving healthcare outcomes.
In parallel, global pharmaceutical revenue is projected to reach $1.16 trillion this year. In addition, the sector’s revenue is estimated to reach $1.45 trillion by 2029, growing at a CAGR of 4.7%.
Furthermore, the healthcare industry is being bolstered by a comprehensive insurance system that includes private insurers, Medicare, and Medicaid. This system ensures a consistent revenue stream for providers through steady reimbursements for services rendered.
According to a report by Mordor Intelligence, the United States health and medical insurance market is expected to reach $2.01 trillion by 2029, exhibiting a CAGR of over 6%.
Considering these factors, let’s explore the fundamentals of three promising healthcare stocks, starting with #3.
Stock #3: UnitedHealth Group Incorporated (UNH)
UNH is a healthcare company with two key businesses, Optum and UnitedHealthcare. Optum caters to the healthcare marketplace, serving patients, providers, and governments. UnitedHealthcare provides a wide range of health benefits to simplify and reduce the cost of care.
On August 13, UNH announced that its UnitedHealthcare Community Plan of Florida was selected to serve Medicaid members in three regions in partnership with the Florida Agency for Health Care Administration (AHCA). This will allow members in 30 counties to access UNH’s services through 2030, significantly expanding the company's reach.
With a network of 247 hospitals and more than 110,000 physicians and care providers statewide, this growth opportunity strengthens UNH's position and supports its long-term commitment to improving healthcare access.
On July 17, UNH announced that its UnitedHealthcare Community Plan of Rhode Island was selected to serve Medicaid members through the Medicaid Managed Care Services (MMCS) program. This will allow Rhode Islanders to access UNH’s services through 2030.
This shows that UNH is staying true to its commitment to improving the access of healthcare to people, expanding its growth horizons.
For the fiscal 2024 second quarter that ended June 30, 2024, UNH’s total revenues increased 6.4% year-over-year to $98.86 billion. Adjusted net earnings attributable to UNH common shareholders came in at $6.31 billion and $6.80 per share, up 9.3% and 10.7% from the prior year’s quarter, respectively.
As of June 30, 2024, UNH’s total assets stood at $286.06 billion compared to $273.72 billion on December 31, 2023.
Analysts expect UNH’s revenue and EPS for the fiscal third quarter (ending September 2024) to increase 7.5% and 7.8% year-over-year to $99.28 billion and $7.07, respectively. In addition, the company has topped the consensus revenue and EPS estimates in all four trailing quarters, which is impressive.
Shares of UNH have gained 10.8% over the past six months and 16.2% over the past year to close the last trading session at $578.07.
UNH’s bright outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
UNH has a B grade for Stability and Sentiment. Within the A-rated Medical – Health Insurance industry, UNH is ranked #5 out of 10 stocks.
Click here to access additional UNH ratings (Value, Growth, Quality, and Momentum).
Stock #2: Merck & Co., Inc. (MRK)
MRK is a global healthcare firm. Its Pharmaceutical segment offers treatments and vaccines in areas like oncology, immunology, and diabetes. The Animal Health segment develops veterinary pharmaceuticals, vaccines, and digital health management solutions for identification, traceability, and monitoring of animals.
On August 9, MRK announced a definitive agreement with Curon Biopharmaceutical, a privately held biotechnology company, to acquire CN201, an investigational bispecific antibody. The $700 million deal aims to enhance MRK’s pipeline for treating B-cell malignancies and autoimmune diseases.
The agreement would aid MRK in expanding its pharmaceutical portfolio and take it a step further in the B-cell treatment drugs market to ensure a steady market position.
On August 6, MRK and Daiichi Sankyo expanded their global agreement to co-develop and co-commercialize three investigational DXd antibody-drug conjugates, including Merck’s MK-6070. The partnership, with Daiichi Sankyo’s expertise in innovative cancer treatments, enhances MRK's position in advancing cutting-edge therapies for high unmet medical needs.
This would position MRK at the forefront of new treatment options for aggressive cancers like small-cell lung cancer and strengthen its portfolio and market presence in oncology.
During the fiscal 2024 second quarter that ended June 30, 2024, MRK’s total sales rose 7.2% year-over-year to $16.11 billion. Its non-GAAP net income and EPS were $5.81 billion and $2.28, compared to a net loss of $5.22 billion and $2.06 per share in the same quarter of 2023, respectively.
Street expects MRK’s revenue for the fiscal fourth quarter ending December 2024 to increase 7.4% year-over-year to $15.71 billion. Its EPS for the next quarter is expected to grow significantly from the prior year’s period to $1.95. Also, the company surpassed the consensus revenue and EPS estimates in each of the four trailing quarters.
Shares of MRK have gained 13.5% over the last nine months to close the last trading session at $116.03.
MRK’s POWR Ratings reflect strong prospects. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
MRK has an A grade for Quality and a B for Value and Stability. It is ranked #5 out of 156 stocks in the Medical – Pharmaceuticals industry.
To see MRK’s additional grades for Growth, Momentum, and Sentiment, click here.
Stock #1: Pfizer Inc. (PFE)
PFE discovers, manufactures, and markets biopharmaceutical products. The company’s Biopharma segment encompasses the Pfizer Oncology, Pfizer U.S. Commercial, and Pfizer International Commercial divisions, with a focus on oncology, primary care, and specialty care.
On July 25, PFE received conditional marketing authorization from the European Commission for its gene therapy, DURVEQTIX, designed to treat severe hemophilia B. The one-time therapy offers the potential for reduced bleeding rates and could provide a viable alternative to regular factor IX infusions.
Continued success with such breakthroughs would ensure PFE's solid growth and leadership in the competitive biopharma sector.
On April 29, PFE and Genmab A/S (GMAB), an international biotech firm, announced that the U.S. Food and Drug Administration (FDA) granted full approval for TIVDAK® under the supplemental Biologics License Application (sBLA). The approval is for treating patients with recurrent or metastatic cervical cancer whose disease has progressed after chemotherapy.
This marks a significant milestone for treating advanced cervical cancer. It establishes TIVDAK as a validated option for extending survival in patients whose disease has continued to progress despite initial treatments, reinforcing PFE’s commitment to addressing high unmet medical needs in oncology.
PFE’s total revenues for the fiscal 2024 second quarter, which ended June 30, 2024, rose 2.1% year-over-year to $13.28 billion. Non-GAAP net income and non-GAAP EPS attributable to PFE common shareholders stood at $3.40 billion and $0.60, respectively, for the quarter.
PFE's consensus estimates for the fiscal fourth quarter ending December 2024 project revenue at $18 billion and EPS at $0.67, reflecting year-over-year growth of 26.3% and 567.3%, respectively. Furthermore, the company surpassed the EPS estimates in all of the trailing four quarters.
PFE shares have gained 1.7% over the past three months and 4.9% over the past six months, closing the last trading session at $29.03.
PFE’s POWR Ratings reflect positive prospects. It has an overall rating of B, translating to a Buy in our proprietary rating system.
PFE has a B grade for Growth, Value, and Sentiment. It is ranked #44 out of 156 stocks in the Medical – Pharmaceuticals industry.
Click here to see PFE’s Momentum, Stability, and Quality ratings.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
UNH shares were unchanged in premarket trading Thursday. Year-to-date, UNH has gained 10.70%, versus a 18.70% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
3 Healthcare Stocks Positioned for Major Gains in 2024 StockNews.com
