The red-hot inflation and rising interest rates have kept the stock market under tremendous pressure over the past months. Moreover, Fed Chair Jerome Powell spooked the market last week when he bluntly warned of some economic discomfort as the Fed remains committed to hiking interest rates to bring inflation under control.
Cleveland Fed President Loretta Mester said that she sees the benchmark interest rates rising above 4% by early 2023.
On the other hand, while the broader market has witnessed a significant sell-off amid the slowing economy, the healthcare industry has been performing relatively well as investors banked on healthcare stocks due to their ability to weather rocky economic times.
Thus, we think investors should consider adding healthcare stocks, Johnson & Johnson (JNJ), Pfizer Inc. (PFE), and Novo Nordisk A/S (NVO) to their portfolios now.
Johnson & Johnson (JNJ)
JNJ is engaged in the research and development, manufacture, and sale of a range of products in the healthcare field. It operates through three segments Consumer; Pharmaceutical; and Medical Devices.
On June 20, JNJ announced the launch of the new J&J Satellite Center for Global Health Discovery at Singapore’s Duke-NUS Medical School. The company expects this first J&J center in the Asia-Pacific region to drive new solutions for flaviviruses by bringing together the talent and expertise of the world’s largest healthcare company with that of a leading academic institution.
JNJ’s sales increased 3% year-over-year to $24.02 billion in the fiscal second quarter of 2022. Its non-GAAP net earnings grew 4.3% from the year-ago value to $6.91 billion, while its non-GAAP EPS improved 4.4% year-over-year to $2.59.
Analysts expect JNJ’s revenue for the fiscal year ending December 2022 to come in at $95.53 billion, indicating an increase of 1.9% year-over-year. The company’s EPS is expected to grow 2.9% year-over-year to $10.08 in the same period. It also surpassed the consensus EPS estimates in each of the trailing four quarters.
JNJ has gained 3.5% over the past nine months to close the last trading session at $165.63.
JNJ’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
JNJ also has an A grade in Stability and a B in Sentiment, Quality, Growth, and Value. It is ranked #1 of 167 stocks in the Medical – Pharmaceuticals industry.
Beyond what is stated above, we’ve also rated JNJ for Momentum. Get all JNJ ratings here.
Pfizer Inc. (PFE)
PFE, a research-based global company, engages in the development, manufacturing, marketing, sales, and distribution of biopharmaceutical products. The company’s global portfolio includes medicines and vaccines.
On September 1, PFE and BioNTech SE (BNTX) announced the recommendation of a 30-µg booster dose of their Omicron BA.1 Bivalent COVID-19 Vaccine for conditional marketing authorization (cMA) by the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP), for individuals 12 years and older. If approved, this should garner significant returns amid the ongoing covid cases.
On August 25, PFE announced positive top-line data from the Phase 3 clinical trial conducted to determine the RSV vaccine efficacy in older adults immunized against RSV disease.
“We are delighted that this first bivalent RSV vaccine candidate, RSVpreF, was observed to be efficacious in our clinical trial against this disease, which is associated with high levels of morbidity and mortality in older adults,” said Annaliesa Anderson, Ph.D., Senior V.P., and Chief Scientific Officer, Vaccine Research and Development, Pfizer.
For the fiscal second quarter of 2022, PFE’s revenues increased 46.8% year-over-year to $27.74 billion. Its adjusted net income grew 93.5% from the year-ago value to $11.66 billion, while its adjusted EPS stood at $2.04, reflecting a 92.5% increase year-over-year.
The consensus EPS estimate of $6.49 for the ongoing fiscal year represents a 46.9% improvement year-over-year. The consensus revenue estimate of $101.65 billion for the same period represents a 25.1% year-over-year increase.
The stock has slumped 3.6% over the past six months to close the last trading session at $46.56.
It is no surprise that the stock has an overall rating of A, translating to Strong Buy in our POWR Ratings system. PFE also has an A grade in Value and a B in Sentiment and Quality. It is ranked #7 in the same industry.
Click here to get additional POWR Ratings for Momentum, Growth, and Stability for PFE.
Novo Nordisk A/S (NVO)
Headquartered in Bagsvaerd, Denmark, NVO, a healthcare company, is engaged in the research, development, manufacture, and marketing of pharmaceutical products worldwide. It operates in two segments Diabetes and Obesity care; and Biopharm.
On September 1, NVO announced its agreement to acquire Forma Therapeutics Holdings Inc. (FMTX), a clinical-stage biopharmaceutical company focused on transforming the lives of patients with sickle cell disease (SCD) and rare blood disorders; for an equity valuation of $1.1 billion. This is expected to help NVO in enhancing its sickle cell disease pipeline, which should be strategically beneficial for it.
NVO’s net sales increased 25% year-over-year to DKK83.30 billion ($11.19 billion) in the fiscal half-year ended June 30, 2022. Its operating profit improved 26% year-over-year to DKK37.54 billion ($5.04 billion) over the period, while its net profit increased 11% from its year-ago value to DKK27.53 billion ($3.70 billion). The company’s EPS was DKK12.08, up 13% over the period.
NVO’s revenue for the fiscal quarter ending September 2022 is expected to come in at $5.95 billion, indicating a 7% year-over-year growth. The company’s EPS is expected to increase 6.5% year-over-year to $0.88 in the same period.
NVO’s shares have gained 6.1% over the past year to close the last trading session at $103.50.
NVO’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to Strong Buy in our POWR Ratings system.
The company also has an A grade in Quality and a B in Value, Sentiment, and Stability. In the same industry, the stock is ranked #5. To get NVO’s ratings for Growth, and Momentum, click here.
JNJ shares were trading at $163.13 per share on Friday afternoon, down $2.21 (-1.34%). Year-to-date, JNJ has declined -2.76%, versus a -16.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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