The healthcare industry is buoyed by influential factors such as the prevalence of diseases, a burgeoning aging population, and a surge in prescription rates. Therefore, investors could consider adding top medical stocks CVS Health Corporation (CVS), Agilent Technologies, Inc. (A), and MiMedx Group, Inc. (MDXG), which are expected to soar in 2024.
The healthcare industry in 2024 is shaped by transformative trends, including the widespread impact of generative AI, the rise of personalized medicine leveraging technology and data, and the integration of virtual healthcare assistants for improved patient care and engagement. The global pharmacy market is projected to expand at a CAGR of 4.3% until 2028.
Moreover, the diagnostic testing market is expected to grow significantly due to factors such as increased demand for medical tests, advancements in point-of-care diagnostics, and the rising occurrence of chronic diseases, driven in part by an aging global population. The global diagnostic testing market is projected to expand at a CAGR of 8.6% to surpass around $348.75 billion by 2030.
Furthermore, increasing R&D investment and regulatory approvals drive the growth of the medical devices market, with advancements meeting healthcare needs.
In 2023, the revenue in the medical devices market is projected to reach $553.90 billion. The market is expected to expand at a CAGR of 6.2% to reach $749.30 billion by 2028. The market's largest market is cardiology devices, with a projected market volume of $68.35 billion this year.
Considering these conducive trends, let’s look at the fundamentals of the three best medical stocks.
CVS Health Corporation (CVS)
CVS provides diverse health services and offers health insurance, pharmacy benefits, and retail products, including prescription drugs and walk-in medical clinics through MinuteClinic. The company operates across three segments: Health Care Benefits; Pharmacy Services; and Retail/LTC.
On December 6, CVS awarded $2 million in Hometown Fund grants to organizations in Connecticut, Massachusetts, and Rhode Island, focusing on improving access to equitable health care and addressing social determinants of health.
The company pays $2.66 annually as dividends, which translates to a yield of 3.37% on the prevailing price level. Its four-year average dividend yield is 2.74%. The company has raised its dividend payouts at a CAGR of 6.6% and 3.9% over the past three and five years. Moreover, it boasts a 26-year record for consecutive years of dividend payments.
CVS’ trailing-12-month EBIT margin of 4.05% is 348.1% higher than the industry average of 0.90%. Its 3.46% trailing-12-month levered FCF margin is significantly higher than the 0.29% industry average.
In the third quarter, which ended September 30, 2023, CVS reported total revenues of $89.76 billion, up 10.6% from the previous-year quarter. The company's adjusted operating income and income per common share attributable to CVS grew 2.5% and 1.8% year-over-year to $4.46 billion and $2.21, respectively.
As of September 30, 2023, CVS’ total assets amounted to $251.31 billion, compared to its total assets of $228.28 billion as of December 31, 2022.
For the full year of 2023, the company projects its adjusted EPS ranging between $8.50 and $8.70. Additionally, the cash flow from operations is expected to be between $12.50 billion and $13.50 billion.
Street expects CVS’ revenue to grow 7.6% year-over-year to $90.18 billion for the fourth quarter ending December 2023. Its EPS for the same quarter is expected to be $1.97. The company surpassed the revenue and EPS estimates in each of the trailing four quarters, which is impressive.
CVS’ shares have gained 15.9% over the past six months and 13.9% over the past month to close the last trading session at $78.97.
CVS’ POWR Ratings reflect its positive prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CVS has a B grade for Value, Stability, and Sentiment. Within the B-rated Medical - Drug Stores industry, it is ranked first among three stocks.
In addition to the POWR Ratings stated above, one can access CVS’ additional Growth, Momentum, and Quality ratings here.
Agilent Technologies, Inc. (A)
A provides specialized solutions in life sciences, diagnostics, and applied chemical markets globally. Its offerings include analytical instruments, software, and services across three segments: Life Sciences and Applied Markets; Diagnostics and Genomics; and Agilent CrossLab.
The company upgraded the BioTek Cytation C10 confocal imaging reader with water immersion and confocal spinning disk tech. This enhances image quality for live-cell and 3D applications, meeting the demand for advanced imaging in complex research areas.
The company pays $0.94 annually, which translates to a yield of 0.68% on the prevailing price level. Its four-year average dividend yield is 0.65%. It has raised its dividend payouts at a CAGR of 7.5% and 8.3% over the past three and five years.
A’s trailing-12-month EBIT margin of 20.58% is significantly higher than the industry average of 0.81%. Its 24.54% trailing-12-month EBITDA margin is 354.1% higher than the 5.41% industry average.
During the fourth quarter, which ended October 31, 2023, A’s net revenue stood at $1.69 billion. The company generated income from operations and non-GAAP net income of $408 million and $404 million, respectively. Moreover, it reported an EPS of $1.38.
For fiscal year 2024, the company projects revenue between $6.71 billion and $6.81 billion. Non-GAAP earnings guidance for the fiscal year is expected to be in the range of $5.44 to $5.55 per share.
A’s revenue and EPS are expected to grow 6.7% and 10.7% year-over-year to $7.23 billion and $6.10 for the fiscal year ending October 2025, respectively. The company surpassed the revenue and EPS estimates in each of the trailing four quarters.
A’s shares increased 19.9% over the past six months and 24.6% over the past three months to close the last trading session at $139.77.
A’s POWR Ratings reflect this sound outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has a B grade for Quality. Within the Medical - Diagnostics/Research industry, it is ranked #8 out of 47 stocks.
Click here for A’s additional Growth, Value, Momentum, Stability, and Sentiment ratings.
MiMedx Group, Inc. (MDXG)
MDXG specializes in developing and distributing placental tissue allografts for healthcare applications. Utilizing its patented PURION process, the company offers products for chronic wounds, surgical recovery, and various medical sectors.
A declared a regular quarterly dividend of $0.24 per common share. The company pays $0.94 annually, which translates to a yield of 0.68% on the prevailing price level. Its four-year average dividend yield is 0.65%. The company has raised its dividend payouts at a CAGR of 7.5% and 8.3% over the past three and five years.
MDXG’s trailing-12-month gross profit margin of 82.15% is 44.5% higher than the industry average of 56.8%. Its 5.45% trailing-12-month EBIT margin is 503.2% higher than the 0.90% industry average.
In the third quarter, which ended September 30, 2023, MDXG's net sales and gross profit increased 20.7% and 20.6% year-over-year to $81.71 million and $66.92 million, respectively. The company reported adjusted EBITDA of $17.62 million, up 640% from the previous-year quarter.
Its adjusted net income and EPS amounted to $8.03 million and $0.05, compared to its prior-year quarter’s adjusted loss and loss per share of $1.70 million and $0.03, respectively.
Analysts expect MDXG’s revenue and EPS to grow 11.2% and 207.3% year-over-year to $355.70 million and $0.32, respectively, for the fiscal year ending December 2024. The company surpassed the EPS estimates in each of the trailing four quarters.
The stock has gained 228.4% over the past year and 220.1% year-to-date to close the last trading session at $8.90.
MDXG’s optimistic outlook is reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
It has an A for Growth and Quality and a B for Sentiment. Within the Medical - Devices & Equipment industry, it is ranked #2 of 145 stocks.
To see MDXG’s additional POWR Ratings for Value, Momentum, and Stability, click here.
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CVS shares were trading at $78.82 per share on Friday afternoon, down $0.15 (-0.19%). Year-to-date, CVS has declined -12.69%, versus a 25.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
3 Medical Stocks Set to Soar in 2024 StockNews.com
