Amid a growing geriatric population, increasing medical demand, and surging health spending, the healthcare sector is well-poised for considerable growth in the foreseeable years. Further, the growing adoption of emerging technologies in the healthcare system is advancing patient care and diagnosis and enhancing efficiency.
Given the industry’s promising outlook, it could be wise to buy quality healthcare stocks AbbVie Inc. (ABBV), Boston Scientific Corporation (BSX), and CVS Health Corporation (CVS) poised to benefit.
The healthcare segment’s significance is increasing swiftly with the growing aging population, increasing healthcare costs, and technological advancements. According to the CMS projections, National Health Expenditures (NHE) and health insurance during 2023-2032 will grow exponentially. It is expected that NHE growth of 5.6% will likely outpace the average annual GDP growth of 4.3%.
This will result in an increase in the health spending share of GDP from 17.3% in the year 2022 to 19.7% by 2032. Further, the healthcare market is evolving with the adoption of emerging technologies like AI to address cost reduction, improve access to care, and reduce worker shortages.
The healthcare services market is poised to grow at a CAGR of 5%, reaching $10.91 trillion by 2028, driven by a growing aging population, expansion of digital health services, integration of telemedicine, and the rising focus on patient-centered care. Further, the US pharmaceuticals market revenue is expected to reach $630.30 billion in 2024, exhibiting the highest revenue globally.
Besides, with the increasing demand for healthcare, the medical devices market is on the rise. The global medical devices market is projected to grow to $886.80 billion by 2032, expanding at a CAGR of 6.3%, whereas the U.S. medical devices market is projected to value $314.96 billion by 2032, owing to the robust pipeline and increasing R&D investment.
Given the industry’s bright prospects, fundamentally strong medical stocks ABBV, BSX, and CVS could be ideal additions to your portfolio for potential gains.
Let’s discuss the fundamentals of these stocks in detail:
AbbVie Inc. (ABBV)
ABBV discovers, develops, manufactures, and sells pharmaceuticals globally. The company’s portfolio includes Humira, Skyrizi, Rinvoq, Imbruvica, Epkinly, Elahere, and Venclexta/Venclyxto.
On September 10, ABBV received Health Canada approval for its CONSTELLA® (linaclotide) as a once-daily oral treatment for children and adolescents 6 to 17 years of age with functional constipation. This makes CONSTELLA the first and only Health Canada-approved prescription therapy treating functional constipation in this patient population.
On September 4, ABBV announced that Canada's Drug Agency (CDA) recommended VRAYLAR to be reimbursed for conditions for the treatment of schizophrenia in adults. The positive reimbursement recommendation is expected to cater to the unmet need to manage negative symptoms of schizophrenia in Canada.
Also, on August 1, ABBV completed the acquisition of Cerevel Therapeutics (CERE), which made Cerevel a part of ABBV. Cerevel is a suitable strategic fit aligning well with ABBV's operations. Its clinical-stage assets complement ABBV's emerging neuroscience pipeline and expand its market in psychiatry, migraine, and Parkinson's disease.
ABBV’s net revenue increased 4.3% year-over-year to $14.46 billion during the second quarter that ended June 30, 2024, of which its revenue from the Neuroscience segment grew 14.7% from the prior year's quarter to $2.16 billion. Adjusted net earnings and EPS attributable to ABBV came in at $4.71 billion and $2.65 for the quarter, respectively.
ABBV raised its adjusted EPS guidance for the full year 2024 to $10.71 - $10.91 from the prior $10.61 - $10.81 range.
Street expects ABBV’s revenue for the fourth quarter (ending December 2024) to increase 2.4% year-over-year to $14.65 billion. Likewise, the company’s EPS is expected to grow 5.7% year-over-year to $2.95 for the same period. Further, the company surpassed the consensus revenue estimates in each of the trailing four quarters.
Shares of ABBV have gained 11% over the past six months and 33.8% over the past year to close the last trading session at $199.35.
ABBV’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Growth, Value, Quality, Stability, and Sentiment. ABBV is ranked #2 out of 160 stocks in the Medical - Pharmaceuticals industry.
Click here to access additional ratings for ABBV.
Boston Scientific Corporation (BSX)
BSX develops, manufactures, and markets medical devices for use in various interventional medical specialties internationally. The company operates in two segments, MedSurg; and Cardiovascular. It provides devices to diagnose and treat gastrointestinal and pulmonary conditions.
On August 27, BSX obtained the CE mark for the ACURATE Prime™ Aortic Valve System, the newest transcatheter aortic valve replacement technology of its structural heart portfolio. The ACURATE Prime valve system has been designed with several features to build upon the clinical performance of the ACURATE neo2™ platform.
On June 18, BSX entered into a definitive agreement to acquire Silk Road Medical, Inc. (SILK), a leading minimally invasive medical device company for carotid artery procedures, for $27.50 in cash per share, representing a total value of approximately $1.26 billion.
In the second quarter that ended June 30, 2024, BSX’s net sales increased 14.5% year-over-year to $4.12 billion. Its adjusted gross profit rose 11.9% from the year-ago value to $2.90 billion. The company’s adjusted net income stood at $913 million or $0.62 per common share, reflecting 16.2% and 17% growth from the prior year's quarter, respectively.
As per the company's guidance, BSX expects net sales growth of 13% to 15%, and its adjusted EPS is expected to be $0.57 - $0.59 for the third quarter of 2024.
Also, for the full year, the company's net sales organic growth is projected between 13% and 14%. And its adjusted EPS is expected to range from $2.38 to $2.42.
Analysts expect BSX’s revenue for the third quarter (ending September 2024) to increase 14.5% year-over-year to $4.04 billion. The company’s EPS for the ongoing quarter is expected to grow 17.6% year-over-year to $0.59. Also, the company has topped the consensus revenue and EPS estimates in all trailing four quarters.
BSX’s stock gained 25.6% over the past six months and 52.2% over the past year to close the last trading session at $83.06.
BSX’s sound fundamentals are reflected in its POWR Ratings. The stock has a B grade for Growth, Stability, and Sentiment. BSX is ranked #40 in the list of 132 stocks in the Medical – Devices & Equipment industry.
To access additional ratings of BSX for Momentum, Value, and Quality, click here.
CVS Health Corporation (CVS)
CVS provides health solutions in the United States. It operates through Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness segments. The Health Care Benefits segment offers traditional, voluntary, and consumer-directed health insurance products and related services.
On July 8, CVS’ board of directors approved a quarterly dividend of $0.66 per share on its common Stock. The dividend was paid on August 1, 2024, to holders of record on July 22, 2024.
On May 16, CVS’ retail division, CVS Pharmacy®, launched Well Market™, a new store brand consumables line featuring snacks, beverages, and groceries. The Well Market line offers a fusion of nutrition options and irresistible flavors that customers crave.
CVS’ total revenues increased 2.6% year-over-year to $91.23 billion for the second quarter that ended June 30, 2024, and its adjusted operating income was $3.72 billion. Adjusted income attributable to CVS Health came in at $2.31 billion and $1.83 per common share for the quarter, respectively.
In addition, the company’s cash and cash equivalents amounted to $12.51 billion as of June 30, 2024, compared to $8.20 billion as of December 31, 2023.
According to the company's revised guidance for full-year 2024, adjusted income attributable to CVS Health is expected to be between $8.08 billion and $8.39 billion and between $6.40 and 6.65 per common share. The company also revised its cash flow from operations guidance to approximately $9 billion.
Analysts expect CVS’ revenue and EPS for the first quarter (ending March 2025) to increase 5.4% and 11.7% year-over-year to $93.24 billion and $1.46, respectively. Moreover, the company surpassed the consensus EPS estimates in three of the four trailing quarters.
The stock has gained 0.8% over the past month to close the last trading session at $56.94.
CVS’ POWR Ratings reflect its robust outlook. The stock has a B grade for Value. CVS has topped among the 4 stocks within the Medical – Drug Stores industry.
Click here to access additional POWR Ratings of CVS for Sentiment, Growth, Quality, Stability, and Momentum.
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ABBV shares were trading at $194.79 per share on Wednesday afternoon, down $4.56 (-2.29%). Year-to-date, ABBV has gained 29.26%, versus a 16.79% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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