The growth of the healthcare services market is expected to be driven by factors such as the rising cases of infectious and chronic diseases, a surge in the adoption of automated platforms, and improved access to healthcare services for the general populace.
Given this backdrop, it could be wise to consider investing in fundamentally strong specialty healthcare stocks, Agilent Technologies, Inc. (A), BioNTech SE (BNTX), and STERIS plc (STE).
As medical science has developed, patients have turned toward specialty care because they provide treatments for complex ailments. For instance, the global specialty hospitals market is expected to grow at a 13.5% CAGR by 2031.
Simultaneously, the growing emphasis on health among adults globally and the increasing focus of regional and national healthcare agencies on monitoring and diagnosis have been pivotal in the changing healthcare landscape. Therefore, the global medical devices market is projected to grow at a CAGR of 6.3% by 2032.
Additionally, innovations in diagnostic technologies, including next-generation sequencing (NGS), digital pathology, and advanced imaging techniques, are bolstering the accuracy and efficiency of diagnostic tests. The clinical diagnostics market is estimated to grow at a CAGR of 5.5% by 2030.
Given these favorable industry trends, let’s look at the fundamentals of three healthcare stocks.
Agilent Technologies, Inc. (A)
A provides application-focused solutions to the life sciences, diagnostics, and applied chemical markets worldwide. The company operates in three segments: Life Sciences and Applied Markets; Diagnostics and Genomics; and Agilent CrossLab.
In terms of the trailing-12-month EBIT margin, A’s 23.72% is 780.1% higher than the 2.69% industry average. Likewise, its 17.37% trailing-12-month levered FCF margin is 530.3% higher than the 2.76% industry average.
During the fourth quarter ended October 31, 2024, A’s net revenue increased by 6.8% year-over-year to $1.70 million. The company’s non-GAAP net income increased 3.5% and 5.8% year-over-year to $418 million or $1.46 per share, respectively.
The consensus revenue estimate of $1.65 billion for the fiscal second quarter (ending April 2025) represents a 4.9% increase year-over-year. The company expects its EPS to increase 7% year-over-year to $1.31. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has surged 1.5%, closing the last trading session at $136.79.
A’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which equates 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.
A has a B grade for Stability, Quality, and Sentiment. It is ranked #5 out of 45 stocks in the Medical - Diagnostics/Research industry. Click here to see the additional ratings for A (Value, Momentum, and Growth).
BioNTech SE (BNTX)
BNTX is a biotechnology company that develops and commercializes immunotherapies for cancer and other infectious diseases. The company is based in Mainz, Germany.
On February 3, BNTX announced the completion of the acquisition of Biotheus, a clinical-stage biotechnology company dedicated to the discovery and development of novel antibodies to address the unmet medical needs of patients with oncological or inflammatory diseases.
In terms of the trailing-12-month gross profit margin, BNTX’s 84.31% is 43.7% higher than the 58.67% industry average. Similarly, the stock’s 9.99% trailing-12-month levered FCF margin is significantly higher than the 2.76% industry average.
For the third quarter of 2024, which ended September 2024, BNTX’s revenues increased 22.7% year-over €1.24 billion ($1.30 billion). Its net profit increased 23.3% and 22.7% year-over-year to €198.10 million ($207.10 billion) and €0.81 per share, respectively.
Street expects BNTX’s revenue and EPS for the fiscal fourth quarter (ended December 2024) to be $1.20 billion and $0.39, respectively.
Shares of BNTX have gained 28.6% over the past year to close the last trading session at $117.88.
BNTX’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
BNTX has a B grade for Value, Sentiment, and Quality. It is ranked #23 out of 338 stocks in the Biotech industry.
In addition to the POWR Ratings we’ve stated above, we also have BNTX ratings for Momentum, Growth, and Stability. Get all BNTX ratings here.
STERIS plc (STE)
STE provides infection prevention products and services worldwide. It operates through three segments: Healthcare; Applied Sterilization Technologies (AST); and Life Sciences.
In terms of the trailing-12-month levered FCF margin, STE’s 16.26% is 489.9% higher than the 2.76% industry average. Its 17.76% trailing-12-month EBIT margin is 559.1% higher than the 2.69% industry average.
For the third quarter that ended on December 31, 2024, STE’s revenues rose 4.9% year-over-year to $1.37 billion. Its net income grew 22.9% from the year-ago value to $173.29 million. In addition, the company’s EPS stood at $1.75 billion.
The consensus revenue estimate of $1.36 billion for the fiscal first quarter (ending June 2025) represents a 6% increase year-over-year. The consensus EPS estimate of $2.28 for the same quarter indicates a 12.2% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
Over the past three months, the stock has surged 4%, closing the last trading session at $220.79.
STE’s POWR Ratings reflect its bright outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
STE has a B grade for Stability and Growth. It is ranked #12 out of 131 stocks in the Medical - Devices & Equipment industry. Click here to see the additional ratings for STE (Sentiment, Momentum, Value, and Quality).
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A shares were trading at $135.96 per share on Friday afternoon, down $0.83 (-0.61%). Year-to-date, A has gained 1.21%, versus a 2.77% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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