Looking for the best healthcare stocks to invest in? Our article reveals the top 3 picks that are set to make big gains in the next 12 months.
Longer-living population, emergence of transformative technologies together with applications throughout healthcare spectrum, and unsettled global economic environment are some of the key factors which are expected to support healthcare industry in 2024.
On tech side, artificial intelligence (AI) should significantly change everything from way medicines are developed and patients are treated to business and commercial side of healthcare industry.
Experts believe that revenue in healthcare market should be able to touch US$16.81 billion in 2023 and sectoral revenue should be able to compound at an annual growth rate of 12.71% between 2023-2027, resulting in expected market volume of US$27.13 billion by 2027. Strong growth opportunities and healthy financial strength are expected to support top healthcare stocks to buy now.
With expected market volume of US$19,070.00 million in 2023, most of the revenue is expected to come from China. In Healthcare market, number of users should be able to amount to 84.4 million users by 2027. User penetration might be ~21.7% by the end of 2023 and this should touch ~24.3% by 2027.
With all such technological innovation, healthcare industry—med-tech in specific—is ready for increased investor interest which should stem revenue and profit growth for top healthcare companies.
With this in mind, let us quickly have a look at top healthcare stocks which investors should buy now and hold for upcoming 12 months.
Top Healthcare Stocks to Buy Now
- Vertex Pharmaceuticals Incorporated
- Intuitive Surgical, Inc.
- NovoCure Limited
1. Vertex Pharmaceuticals Incorporated
The company has been categorised as a global biotechnology company which discovers and develops small-molecule drugs for treatment of serious diseases.
It has released its consolidated financial results for 2Q23 and updated its full-year 2023 financial guidance. The 2Q23 saw another period of significant progress throughout its business. It continues to reach more patients globally with its cystic fibrosis medicines, advancing its late-stage clinical programs and making strong progress throughout its research and development pipeline of transformative medicines.
Product revenue of the company grew by ~14% to $2.49 billion in comparison to 2Q22, mainly because of strong uptake of TRIKAFTA/KAFTRIO in numerous countries internationally and continued performance of TRIKAFTA in the U.S., which includes launch in children with CF 2 – 5 years of age.
Cash, cash equivalents and total marketable securities as at June 30, 2023 came in at $12.6 billion against $10.9 billion as of December 31, 2022. Rise was mainly because of strong revenue growth and operating cash flow, which was partially offset by its payments to Entrada Therapeutics, CRISPR Therapeutics and other collaboration partners, common stock repurchases pursuant to its share repurchase program, and payments regarding income tax.
The company has raised its FY23 CF product revenue guidance to $9.7 billion – $9.8 billion from $9.55 billion – $9.7 billion previously. This growth exhibits expected full-year impact of strong uptake of TRIKAFTA/KAFTRIO in several countries internationally and continued performance of TRIKAFTA in the United States.
2. Intuitive Surgical, Inc.
The company develops, produces, and markets robotic system for assisting minimally invasive surgery. It has announced financial results for the quarter ended June 30, 2023.
Second quarter 2023 revenue of the company came in at $1.76 billion, exhibiting a rise of ~15% in comparison to $1.52 billion in 2Q22. Higher second-quarter revenue stemmed from growth in da Vinci procedure volume and a rise in installed base of systems. In 2Q23, instruments and accessories revenue grew 20% to $1.08 billion against $0.90 billion in 2Q22. This growth was mainly because of ~22% growth in da Vinci procedure volume.
It closed 2Q23 with $7.13 billion in cash, cash equivalents, and investments, which exhibits a rise $553 million during 2Q23. This was mainly because of cash generated from operations, which was partially offset by capital expenditures.
Core business of the company was supported by positive surgical trends and continued interest in robotic-assisted surgery. Focus of the company is now on supporting customers’ adoption, pursuing expanded indications, increasing productivity, etc.
3. NovoCure Limited
NovoCure Ltd operates in healthcare sector of the US. The company’s business involves commercial-stage oncology operations, which involves therapies to cure critical tumors.
The company saw quarterly net revenues of $126 million, with 3,571 active patients on therapy as at June 30, 2023. 2Q was a period of sound execution and expansion at the company. Restructured commercial organization has started seeing greater penetration in critical markets and launch of Optune® in France was a success. The company continues to prepare itself to introduce next generation arrays in more markets in the remainder of the year.
Total net revenues for the quarter saw a decline on year-over-year basis and this was primarily from $13.4 million in reduced collections from previously denied or appealed claims in the United States. The United States, Germany and Japan made a contribution of $87.0 million, $15.7 million and $7.9 million, respectively, and the company’s other active markets contributed $8.7 million.
Gross margin for the quarter came in at 73% and research, development and clinical studies expenses were $55.4 million, which exhibits a fall of ~3% from same period in 2022.
Net loss for the quarter came in at $57.4 million with loss per share of $0.54 and adjusted EBITDA for the quarter was $(27.2) million. Cash, cash equivalents and short-term investments came at $940.8 million as at June 30, 2023. As of June 30, 2023, 3,571 active patients were there on therapy. Active patients from US, Germany and Japan made the contribution of 2,200, 499 and 352 active patients, respectively, with the remaining 520 active patients contributed by several other active markets.
Top healthcare stocks should now be supported by growth opportunities which are provided by med-tech market. Industry which was valued at $456.9 billion in 2020, med-tech should grow to $800 billion by 2030.
Therefore, top healthcare stocks are now focusing on expanding their valuation and capabilities with the help of mergers and acquisitions with med-tech companies to get competitive edge. Generative artificial intelligence (genAI) is a latest development which has stormed almost every industry. In med-tech space, generative AI has capacity to significantly improve efficiency, which should reduce pressure on healthcare workers and improve patient outcomes.