3 Healthcare Stocks That Are Looking Even Healthier
- Intuitive Surgical (ISRG): The key player in the global minimally invasive surgical equipment market is likely to benefit from global growth.
- Merck (MRK): Increasing pharmaceutical demand due to an aging global population and soaring spending on pets should boost revenue.
- Teladoc Health (TDOC): The stock, which is down about 28% in 2022, now offers better long-term value.
Healthcare stocks are getting increased attention in April. The NYSE Healthcare Index has returned more than 15% over the past year.
In the past two years, fortunes of healthcare and pharma names have been highly dependent on the ebbs and flows of the pandemic. Now, as life begins to feel a lot more normal for most Americans, Wall Street is debating how revenues in the health and pharma space could evolve.
A recent study suggests, “Healthcare utilization decreased by about a third during the pandemic, with considerable variation, and with greater reductions among people with less severe illnesses. While addressing unmet needs remains a priority, studies of health impacts of reductions may help health systems reduce unnecessary care in the post-pandemic recovery.”
In other words, the broader healthcare industry has had to cope with many question marks and work on vaccine development. Meanwhile, alternate solutions such as telemedicine have gained traction.
With that information, here are three healthcare stocks to buy as the pandemic fears gradually fade away:
| ISRG | Intuitive Surgical | $280.35 |
| MRK | Merck | $87.07 |
| TDOC | Teladoc Health | $64.92 |
Intuitive Surgical (ISRG)
Our first entry in this list of healthcare stocks is Intuitive Surgical (NASDAQ:ISRG). This medical equipment name specializes in minimally invasive surgeries. It is primarily known for its cutting-edge robotic technology, the da Vinci surgical system.
Intuitive reported fourth-quarter 2021 results on Jan. 20. Revenue grew 17% year-over-year (YOY) to $1.55 billion. Net income came in at $477 million, or $1.30 per diluted share, compared to the prior year’s $434 million. Cash and equivalents ended the quarter at $8.6 billion. This number showed an increase of $1.8 billion from the year-ago period, driven by cash generated from operations.
Looking ahead, management aims to expand the robotic and digital platform. International expansion, in addition to growth stateside, is also a main strategic aim.
With hospitals reopening for elective surgeries, the sector could potentially see explosive growth in the short term. According to Grand View Research, the global minimally invasive surgical instruments market is expected to grow at a compound annual growth rate (CAGR) close to 15% between 2021 and 2028. Thus, Intuitive Surgical, the leader in the market, deserves your attention.
ISRG stock is down roughly 22% YTD. Shares are trading at 55.9 times forward earnings and 17.9 times trailing sales. Meanwhile, the 12-month median price forecast for Intuitive Surgical stands at $340.
Merck (MRK)
Next up is the pharma behemoth Merck (NYSE:MRK). It has a lineup that includes the key cancer drug Keytruda and human papillomavirus (HPV) vaccines, Gardasil and Gardasil9. The group has also been expanding its animal health business.
Merck released Q4 2021 results on Feb. 3. Revenue increased 24% YOY to $13.5 billion. Net income of $4.6 billion, or $1.80 per share, implied a surge of 84% compared to $2.5 billion in the prior-year quarter.
Over the past year, the global healthcare company has strengthened its position by advancing the existing product pipeline with acquisitions. It has also enhanced the current lineup while securing numerous regulatory approvals worldwide.
Analysts concur Merck should benefit from long-term tailwinds in healthcare spending. We are seeing an aging global population with increased healthcare needs. In addition, pet owners are happy to spend more money on their much-loved furry friends. As a result, Merck will likely see top-line growth in future quarters.
MRK stock has returned more than 13% since the start of the year. It currently supports a hefty dividend yield of more than 3%. Shares are changing hands at 12.1 times forward earnings and 4.6 times trailing sales. Finally, the 12-month median price forecast for Merck stands at $93.40.
Teladoc Health (TDOC)
Our final healthcare stock for today is Teladoc Health (NYSE:TDOC). As the world’s largest telehealth platform, it offers on-demand virtual medical care services. In 2020 and 2021, the healthcare company benefited greatly from the “stay-at-home” days of the pandemic.
Teladoc issued Q4 2021 results on Feb. 22. Revenue came in at $554 million, up 45% YOY. The company posted a net loss of $11 million, or 7 cents per share, compared to the previous year’s loss of $394 million. Cash and equivalents ended the quarter at $893.5 million.
Most Americans have started visiting doctors in person again, yet the platform is still growing. For instance, it had 4.4 million visits in Q4 and 15.4 million in full-year 2021, up 41% and 38%, respectively.
Meanwhile, the average revenue per paid subscriber increased more than 52% YOY to $2.49. Management anticipates revenue to grow by 25% to 30% and total visits to hit as high as 20 million this year.
In addition, the telemedicine leader recently partnered with Amazon (NASDAQ:AMZN) to launch Teladoc on Alexa. This digital assistant will connect customers to a Teladoc call center on supported Echo devices.
TDOC stock is down 31% YTD. Shares are trading at 5.1 times trailing sales. At present, the 12-month median price forecast for Teladoc Health stands at $95.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
