Healthcare companies are pushing the status quo by innovating in areas like drug development and digital health. Despite the rosy long-term prospects, short-term headwinds such as COVID inventory destocking have harmed the industry’s returns - over the past six months, healthcare stocks have collectively shed 5.2%. This performance is a stark contrast from the S&P 500’s 4.8% gain.

Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. With that said, here is one resilient healthcare stock at the top of our wish list and two we’re steering clear of.

Two HealthcareStocks to Sell:

Haemonetics (HAE)

Market Cap: $3.66 billion

With roots dating back to 1971 and a mission to improve blood-related healthcare, Haemonetics (NYSE: HAE) provides specialized medical devices and software for blood collection, processing, and management across plasma centers, blood banks, and hospitals.

Why Is HAE Not Exciting?

1. 6.6% annual revenue growth over the last five years was slower than its healthcare peers
2. Smaller revenue base of $1.36 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
3. Sales are projected to tank by 4.6% over the next 12 months as demand evaporates

Haemonetics is trading at $76.24 per share, or 15.5x forward P/E. Read our free research report to see why you should think twice about including HAE in your portfolio.

Repligen (RGEN)

Market Cap: $7.13 billion

With over 13 strategic acquisitions since 2012 to build its comprehensive bioprocessing portfolio, Repligen (NASDAQ: RGEN) develops and manufactures specialized technologies that improve the efficiency and flexibility of biological drug manufacturing processes.

Why Do We Steer Clear of RGEN?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 7.5% annually over the last two years
2. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
3. Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 14.8 percentage points

Repligen’s stock price of $127 implies a valuation ratio of 68.8x forward P/E. Check out our free in-depth research report to learn more about why RGEN doesn’t pass our bar.

One Healthcare Stock to Watch:

Lantheus (LNTH)

Market Cap: $5.51 billion

Pioneering the "Find, Fight and Follow" approach to disease management, Lantheus Holdings (NASDAQGM:LNTH) develops and commercializes radiopharmaceuticals and other imaging agents that help healthcare professionals detect, diagnose, and treat diseases.

Why Are We Fans of LNTH?

1. Impressive 34.3% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Free cash flow margin grew by 29.5 percentage points over the last five years, giving the company more chips to play with
3. Rising returns on capital show management is finding more attractive investment opportunities

At $79.31 per share, Lantheus trades at 11.1x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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