Inelastic demand, surging investments, and consistent breakthroughs make healthcare stocks attractive to investors amid these uncertain economic and market conditions. Advanced and viable therapies for chronic and emerging diseases and the aging population should drive the sector’s growth.
Therefore, investing in prominent healthcare stocks could help cushion one’s portfolio as the market volatility is expected to persist due to worries over a recession.
Investors’ interest in this space is evident in the iShares U.S. Healthcare ETF’s (IYH) 0.5% gains over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 6.9% loss. The global consumer healthcare market is expected to grow at a 21.7% CAGR to $932.74 billion by 2026.
Therefore, quality healthcare stocks Assertio Holdings, Inc. (ASRT), Bayer AG (BAYRY), Bristol-Myers Squibb Company (BMY), Catalyst Pharmaceuticals, Inc. (CPRX), and Ipsen S.A. (IPSEY), which are trading at significant discounts to their peers, could be solid investments now. Our proprietary POWR Ratings system has rated them Strong Buy.
Assertio Holdings, Inc. (ASRT)
ASRT is a specialty pharmaceutical company offering differentiated products to patients utilizing a non-personal promotional model. The company offers oral suspension, suppositories, tablets, nasal sprays, and capsules.
On March 31, 2022, ASRT collaborated with BlinkRx, a leading digital pharmacy, to support healthcare professionals and patients undergoing treatment with Otrexup, developed by Antares Pharma, Inc. BlinkRx's program helps reduce barriers that patients encounter while accessing their medications and benefit from transparent low prices and free home delivery.
This will help ASRT leverage its digital platform and existing pharmacy hub capabilities with a new direct-to-patient model to serve patients better.
For its fiscal 2022 first quarter ended March 31, 2022, ASRT’s total revenues increased 36.1% year-over-year to $36.54 million. The company’s income from operations came in at $11.56 million, representing a 54% year-over-year improvement.
ASRT’s non-GAAP net income came in at $17.53 million, indicating a 70.3% rise from the prior-year period. Its non-GAAP EPS increased 40.7% year-over-year to $0.38. As of March 31, 2022, the company had $61.39 million in cash and cash equivalents.
Analysts expect an EPS estimate of $0.40 for fiscal 2022 ending December 31, 2022, indicating a rise of 1433.3% from the prior-year period. The consensus revenue estimate of $131.73 million for the same fiscal year represents an 18.7% year-over-year improvement. Its EPS is expected to grow at a rate of 25% per annum over the next five years.
The stock’s 3.51x forward EV/EBIT is 78.7% lower than the 16.47x industry average. In terms of forward Price/Sales, ASRT is currently trading at 1.13x, which is 75.3% lower than the 4.56x industry average. The stock has gained 45.9% year-to-date to close the last trading session at $3.18.
ASRT’s POWR Ratings reflect this promising outlook. The stock has an overall A grade, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Growth, Value, Sentiment, and Quality. Click here to see the additional ratings for ASRT’s Momentum and Stability. ASRT is ranked #8 of 172 stocks in the Medical - Pharmaceuticals industry.
Bayer AG (BAYRY)
BAYRY is a Germany-based life science company that operates through Pharmaceuticals; Consumer Health; and Crop Science divisions worldwide. It distributes its products through wholesalers, pharmacies and pharmacy chains, supermarkets, online and other retailers, hospitals, and directly to farmers.
On June 28, 2022, BAYRY’s KERENDIA received a new grade A recommendation from the American Diabetes Association (ADA) Standards of Medical Care in Diabetes – 2022 for improving cardiovascular outcomes and reducing the risk of chronic kidney disease (CKD) progression in patients with CKD associated with type 2 diabetes (T2D).
This will help KERENDIA to witness growing demand and gain wide recognition across the industry.
BAYRY’s net sales for its fiscal 2022 second quarter ended March 31, 2022, increased 18.8% year-over-year to €14.64 billion ($14.92 billion). The company’s gross profit came in at €9.46 billion ($1.21 billion), indicating a 24% rise from the year-ago period. Its EBIT came in at €4.21 billion ($4.29 billion) for the quarter, representing a 36.6% rise from the prior-year period.
BAYRY’s net income came in at €3.29 billion ($3.36 billion), up 57.6% from the prior-year period. Its EPS increased 57.3% year-over-year to €3.35. As of March 31, 2022, the company had €5.79 billion ($5.90 billion) in cash and cash equivalents.
The consensus EPS estimate of $1.94 for fiscal 2022 ending December 31, 2022, represents a 1% rise from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. The company’s EPS is expected to grow at a 4.7% rate per annum over the next five years.
The stock’s 10.38x forward EV/EBIT is 37.7% lower than the 16.65x industry average. In terms of forward EV/Sales, BAYRY is currently trading at 1.79x, which is 51.9% lower than the 3.73x industry average. The stock has gained 8.1% year-to-date to close the last trading session at $14.33.
BAYRY’s POWR Ratings reflect this promising outlook. The stock has an overall A grade, equating to Strong Buy in our proprietary rating system.
It has an A grade for Growth and Value and a B grade for Stability. Click here to see the additional ratings for BAYRY’s Sentiment, Quality, and Momentum. BAYRY is ranked #6 in the same industry.
Bristol-Myers Squibb Company (BMY)
BMY develops, licenses, manufactures and markets biopharmaceutical products worldwide. It offers hematology, oncology, cardiovascular, and therapeutic immunology classes and sells products to wholesalers, distributors, pharmacies, retailers, hospitals, clinics, and government agencies.
On June 24, 2022, the U.S. Food and Drug Administration (FDA) approved BMY’s Breyanzi, a CD19-directed CAR T cell therapy, for treating adult patients with large B-cell lymphoma (LBCL).
In the pivotal Phase 3 TRANSFORM trial, a single infusion of Breyanzi significantly outperformed the nearly 30-year standard of care with a median event-free survival of 10.1 months vs. 2.3 months. This should help Breyanzi gain a wide market reach in the coming months.
BMY’s total revenues for its fiscal 2022 third quarter ended March 31, 2022, increased 5.2% year-over-year to $11.65 billion. The company’s non-GAAP gross profit came in at $9.23 billion, indicating a 6.7% rise from the prior-year period. Its non-GAAP EBIT came in at $5.05 billion, representing a 5.8% rise from the prior-year period.
BMY’s non-GAAP net earnings came in at $4.25 billion for the quarter, up 7.1% from the year-ago period. Its non-GAAP EPS rose 12.6% year-over-year to $1.96. As of March 31, 2022, the company had $12.37 billion in cash and cash equivalents.
The consensus EPS estimate of $7.55 for fiscal 2022 ending December 31, 2022, indicates a 0.5% year-over-year improvement. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. Its EPS is expected to grow at 4.6% per annum over the next five years.
The stock’s 10.12x forward EV/EBIT is 39.3% lower than the 16.65x industry average. In terms of forward Price/Sales, BMY is currently trading at 3.50x, which is 23.2% lower than the 4.55x industry average. The stock has gained 22.3% year-to-date to close the last trading session at $76.22.
BMY’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has an A grade for Value and a B grade for Growth and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see BMY’s Momentum, Stability, and Sentiment ratings here. BMY is ranked #5 in the same industry.
Catalyst Pharmaceuticals, Inc. (CPRX)
CPRX is a commercial-stage biopharmaceutical company that focuses on developing and commercializing therapies for people with rare debilitating, chronic neuromuscular, and neurological diseases.
It has license agreements with BioMarin Pharmaceutical Inc. (BMRN) and a collaboration and license agreement with Ireland-based Endo Ventures Limited for developing and commercializing generic Sabril tablets.
On March 2, 2022, the United States Patent and Trademark Office (USPTO) notified CPRX regarding issuing an additional patent covering FIRDAPSE Tablets 10 mg, the company’s proprietary formulation of amifampridine, in the following weeks.
The new patents are directed to treating patients suffering from Lambert-Eaton myasthenic syndrome (LEMS). The issuance of these new patents will further extend FIRDAPSE’s growing intellectual property portfolio.
For its fiscal 2022 first quarter ended March 31, 2022, CPRX’s total revenues increased 42.7% year-over-year to $43.09 million. The company’s operating income came in at $17.37 million, representing a rise of 77.2% from the year-ago period.
CPRX’s non-GAAP net income came in at $19.40 million, indicating a 67.9% rise from the prior-year period. Its non-GAAP EPS increased 63.6% year-over-year to $0.18. The company had cash and investments of $178.37 million as of March 31, 2022.
Analysts expect the company’s EPS to improve 81.1% year-over-year to $0.67 for fiscal 2022 ending December 31, 2022. It surpassed Street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $200.85 million for the same fiscal year represents a 42.6% rise from the prior-year period.
The stock’s 5.89x forward EV/EBIT is 64.7% lower than the 16.65x industry average. In terms of forward Price/Sales, CPRX is currently trading at 3.83x, which is 15.8% lower than the 4.55x industry average. The stock has gained 10.6% year-to-date to close the last trading session at $7.49.
CPRX’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Growth and Value. Click here to see the additional ratings for CPRX’s Momentum, Stability, and Sentiment. CPRX is ranked #12 in the same industry.
Ipsen S.A. (IPSEY)
Based in France, IPSEY operates as a biopharmaceutical company that focuses on oncology, neuroscience, gastroenterology, cognitive disorders, and rare diseases. The company specializes in neurotoxin research and operates three research and development centers in France, the U.K., and the U.S.
With a primary focus on Tazverik, an FDA-approved chemotherapy-free EZH2[1] inhibitor, and EZM0414, an oral SETD2 inhibitor development candidate, on June 27, 2022, IPSEY announced to acquire of commercial-stage biopharmaceutical company Epizyme (EPZM) and close by the end of 2022 third quarter. This will help IPSEY expand its assets in oncology.
For its fiscal 2022 first year ended March 31, 2022, IPSEY’s total sales increased 12.5% year-over-year to €687.90 million ($701.32 million). IPSEY surpassed the consensus revenue estimates in each of the four trailing quarters.
The stock’s 7.74x forward EV/EBIT is 53.5% lower than the 16.65x industry average. In terms of forward Price/Sales, IPSEY is currently trading at 2.57x, which is 43.7% lower than the 4.55x industry average. The stock has gained 30.5% over the past week to close the last trading session at $23.85.
IPSEY’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has an A grade for Value and a B grade for Growth and Stability. In addition to the POWR Ratings grades we have just highlighted, one can see IPSEY’s Sentiment, Quality, and Momentum ratings here. IPSEY is ranked #13 in the same industry.
ASRT shares were trading at $3.28 per share on Thursday afternoon, up $0.10 (+3.14%). Year-to-date, ASRT has gained 50.46%, versus a -17.49% 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.
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