plsputinwebeditorIn a beaten-down market, five medical stocks are showing strength. UnitedHealth, Vertex Pharmaceuticals, Steris, HCA Healthcare and ICU Medical are all setting up near buy points.
Dow component UnitedHealth is one of several health insurers showing strength with its relative strength line at all-time highs. Vertex is rebounding bullishly from its 50-day/10-week lines. Steris, HCA and ICU Medical should benefit from people going back to the hospital for elective procedures as Covid wanes.
Additionally, medical stocks are often seen as safer haven in a turbulent market, because economic swings and international events, like Russia's war in Ukraine, have less impact on U.S. health care spending.
VRTX stock and arguably UnitedHealth are already flashing early entries, while STE stock closed Friday in a traditional buy zone.
UnitedHealth Stock
UnitedHealth earnings per share surged 78% to $4.48 in Q4. Revenue rose 12.6% to $73.7 billion. Management maintained full-year 2022 for adjusted EPS of $21.10 to $21.60. FactSet analysts expect UnitedHealth to earn $21.62 per share.
In a call with investors, CEO Andrew Witty said performance in two key elements of its growth strategy, transition of patients to Optum-led value-based care and Medicare Advantage sign-ups, are both tracking well.
"These and the broader performance across the enterprise confirm our confidence in our ability to advance our stated growth strategies and to support our long-term 13% to 16% EPS growth rate," he said.
Lower Covid cases will spur more people to visit the doctor or hospital, driving up expenses. But the insurance giant also should get more members.
UnitedHealth stock jumped 4.8% to 498.65, rebounding back above its 50-day moving average, including a retest on Friday.
MarketSmith chart analysis shows UNH stock has a double-bottom buy point of 501.03. Arguably, UnitedHealth stock is already flashing an early entry visa a trend line from the late December peak.
Its RS Rating is 93 out a best-possible 99. Its EPS Rating is 95.
UnitedHealth is one of a several health insurers showing strength. Rival Anthem, a recent Stock Of The Day, cleared a consolidation Friday with a 470.12 entry.
Vertex Stock
Vertex, which develops and markets therapies for cystic fibrosis, rose 3.6% to 238.66 last week, rebounding from its 50-day/10-week line for the first time in its recent run. Friday's move came on solid volume, making the early buying opportunity more enticing.
VRTX stock has a flat base with a buy point of 255.03. Its RS line is at a 52-week high.
Leaderboard stock Vertex was Friday's Stock Of The Day.
Vertex Q4 adjusted earnings rocketed 34% to $3.37 per share, while sales surged 27% to $2.07 billion, both easily beating analyst forecasts.
RBC Capital Markets analyst Brian Abrahams sees Vertex's cystic fibrosis drugs bringing in $9 billion in future years. But the biotech is working to expand its reach to treat a wide variety of diseases.
Steris Stock
Ireland-based Steris is a global provider of surgical products and services that support patient care with infection prevention.
Covid certainly boosted demand for Steris products as hospital workers had to be constantly supplied with gear to protect themselves and patients from the highly infectious and contagious virus.
Now, as Covid infection rates fall and hospital beds free up, delayed hospital procedures are poised to pick up again. This will also boost demand for Steris products.
Shares rose 3.3% to 245.18 last week, continuing a rebound from just above its 200-day line on Feb. 24.
Steris stock is just above a 244.82 cup-with-handle buy point. The handle may seem a little large for the base, but a 15%-deep consolidation in the current market correction is a real position. And STE stock has held well above its last January lows. Its RS line has been soaring, hitting a new high. Its RS Rating is 93, while its EPS Rating is 92. Steris has posted three straight quarters of earnings growth and four quarters in a row of sales growth.
HCA Healthcare Stock
Shares are in a cup base with a 269.85 buy point, with the base forming next to a failed double-bottom base.
HCA stock popped 4.8% last week to 265.41, rebounding from its 50-day line and setting a record close on Friday. Arguably, investors could have used 256.03, just above Feb. 17 high, as handle-like early entry.
Its relative strength line is at a new high. HCA stock's fundamentals are strong, with an RS Rating is 93 and EPS Rating is 92.
The Nashville-based company owns and operates general acute care hospitals in the U.S. and U.K.
CEO Samuel Hazen said at a global health conference Feb. 16 that Covid had greatly disrupted its surgical care business.
"We have not had three straight months' worth of consistent business trends where we were fully open for surgical care, we were fully open for transfers, or anything of that nature," he said.
As a result, there's a lot of demand that's been on the sidelines, he added.
"People were just uncertain," he said. "The capacity in the market was constrained because of COVID, and we think that's going to position itself for recovery post omicron variant."
ICU Medical Stock
The San Clemente, Calif.-based company makes disposable medical connection systems for use in vascular therapy, oncology and critical care applications.
ICUI stock rose 6.1% to 242.93 last week.
Shares are working on a 282.10 buy point from a long consolidation. Arguably, ICUI stock flashed an aggressive entry on Feb. 25, surging following earnings to reclaim its 50-day line and break a trend line starting with the Sept. 8 peak. Investors also could view 241.80 or 251.87 as other early entries.
Its RS line spiked up to a multi-month high in recent days. Its RS Rating is 89. However its EPS Rating is just 57, as earnings growth has fallen to single digits in the last two quarters.
Still, like other health care equipment companies, ICU Medical stands to benefit as surgeries and other procedures increase as hospitals have fewer Covid patients.
"We're the most tilted to the U.S. market where we're dependent on admissions and electives, and we saw procedures and admissions as pretty solid as we hoped and stated early in the year," CEO Vivek Jain said in a call with investors Feb. 24.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
