An aging population, increasing prevalence of chronic diseases, and rising investments in R&D should drive the healthcare sector’s growth. Moreover, the passage of the Inflation Reduction Act, which lowers healthcare costs for Americans, is expected to be favorable for the industry. The global consumer healthcare market is expected to grow at a 21.7% CAGR to $932.74 billion by 2026.
Moreover, amid the economy's uncertainties, the inelastic demand for healthcare should help the sector stay resilient. Investors’ interest in this space is evident from the SPDR S&P Health Care Services ETF’s (XHS) 1.7% gains over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 2% loss.
Given this backdrop, Wall Street analysts expect healthcare stocks Ginkgo Bioworks Holdings, Inc. (DNA), Zai Lab Limited (ZLAB), and Roivant Sciences Ltd. (ROIV) to gain nearly 200% in the upcoming months. So, it could be worth adding these stocks to your watchlist.
Ginkgo Bioworks Holdings, Inc. (DNA)
DNA is a biotech company that develops a platform for cell programming to enable the biological production of products, such as novel therapeutics, food ingredients, and chemicals derived from petroleum. It serves specialty chemicals, agriculture, food, consumer products, and pharmaceutical markets.
On August 19, 2022, DNA purchased certain epidemiological data infrastructure assets from Baktus Inc., a public benefit corporation, which has built an extensive database of infectious disease outbreaks and specialized data infrastructure to help governments and other partners understand and model the risks and disruptive impacts of pathogens.
This is expected to bolster DNA’s growing biosecurity platform and provide expanded epidemic tracking, modeling, and forecasting offerings to public health leaders and communities.
For its fiscal 2022 second quarter ended June 30, 2022, DNA’s total revenue increased 231.4% year-over-year to $144.62 million. As of June 30, 2022, the company had $1.38 billion in cash and cash equivalents.
The consensus revenue estimate of $429.81 million for fiscal 2022 ending December 31, 2022, represents a 37% year-over-year improvement. It surpassed Street EPS estimates in each of the trailing four quarters.
The stock has gained 10.1% over the past three months and 3.7% over the past week to close the last trading session at $2.84. The average analyst price target of $9.21 indicates a 224.3% upside potential.
Zai Lab Limited (ZLAB)
Headquartered in Shanghai, China, ZLAB is an innovative, research-based, commercial-stage biopharmaceutical company that develops and commercializes therapies to treat oncology, autoimmune disorders, infectious diseases, and neuroscience in Mainland China, Hong Kong, and the United States.
It has a broad pipeline of proprietary drug candidates ranging from discovery to late-stage clinical programs.
On July 13, 2022, China’s National Medical Products Administration (NMPA) accepted the Biologics License Application (BLA) for ZLAB’s efgartigimod alfa injection, a first-in-class neonatal Fc receptor (FcRn) antagonist, for treating patients with generalized myasthenia gravis (gMG). This will help ZLAB to address the unmet needs of gMG patients in Greater China.
ZLAB’s total revenues for its fiscal 2022 second quarter ended June 30, 2022, grew 30.4% year-over-year to $48.18 million. It had $680.82 million in cash and cash equivalents as of June 30, 2022.
Analysts expect ZLAB’s revenue to be $215.48 million for fiscal 2022 ending December 31, 2022, indicating a 49.3% year-over-year improvement. Its EPS is expected to grow at a rate of 30% per annum over the next five years.
The stock has gained 27.4% over the past three months and 1.3% over the past week to close the last trading session at $43.37. The average analyst price target of $125.62 indicates a 189.7% upside potential.
Roivant Sciences Ltd. (ROIV)
Based in London, the U.K., ROIV is a biopharmaceutical and healthcare technology company that researches and develops product candidates for the treatment of various therapeutics, including immunology, dermatology and oncology, and modalities, including biologics, topicals, and small bifunctional molecules.
It builds biotech and healthcare technology companies (Vants) and deploys technology to drive research, development, and commercialization.
On June 28, 2022, ROIV and multinational pharmaceutical and biotechnology corporation Pfizer Inc. (PFE) announced the unveiling of Priovant Therapeutics, a clinical-stage biotechnology company dedicated to developing targeted therapies for patients with severe autoimmune diseases.
ROIV is developing brepocitinib, a potential first-in-class dual inhibitor of TYK2 and JAK1, in severe autoimmune diseases with few approved therapies and where dual inhibition of TYK2 and JAK1 may provide greater efficacy than inhibiting either alone.
Given the rising need for novel, targeted therapies for dermatomyositis, ROIV’s brepocitinib becomes a promising agent and may result in superior blockade of type I interferon, a key cytokine family implicated in dermatomyositis pathogenesis.
As of June 30, 2022, the company had $1.94 billion in cash and cash equivalents. It surpassed Street EPS estimates in three of the trailing four quarters.
The stock has lost 2.8% over the past three months and 1.6% over the past week to close the last trading session at $3.80. The average analyst price target of $12 indicates a 215.8% upside potential.
DNA shares were trading at $2.93 per share on Thursday afternoon, up $0.09 (+3.17%). Year-to-date, DNA has declined -64.74%, versus a -11.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
3 Healthcare Stocks Wall Street Expects to Soar Nearly 200% StockNews.com
