From novel pharmaceuticals to telemedicine, most healthcare companies are on a mission to drive better patient outcomes. Despite the rosy long-term prospects, short-term headwinds such as COVID inventory destocking have caused the industry to lag recently - over the past six months, healthcare stocks were flat while the S&P 500 was up 10.5%.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here are two healthcare stocks boasting durable advantages and one best left ignored.
One Healthcare Stock to Sell:
Supernus Pharmaceuticals (SUPN)
Market Cap: $2.53 billion
With a diverse portfolio of eight FDA-approved medications targeting neurological conditions, Supernus Pharmaceuticals (NASDAQ: SUPN) develops and markets treatments for central nervous system disorders including epilepsy, ADHD, Parkinson's disease, and migraine.
Why Does SUPN Fall Short?
- 2.4% annual revenue growth over the last two years was slower than its healthcare peers
- Smaller revenue base of $665.1 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Supernus Pharmaceuticals is trading at $44.09 per share, or 22.7x forward P/E. Check out our free in-depth research report to learn more about why SUPN doesn’t pass our bar.
Two Healthcare Stocks to Watch:
Lantheus (LNTH)
Market Cap: $3.73 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 Do We Like LNTH?
- Market share has increased this cycle as its 35.6% annual revenue growth over the last five years was exceptional
- Free cash flow margin jumped by 22.9 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
- Improving returns on capital reflect management’s ability to monetize investments
At $55.30 per share, Lantheus trades at 8.2x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Astrana Health (ASTH)
Market Cap: $1.60 billion
Formerly known as Apollo Medical Holdings until early 2024, Astrana Health (NASDAQ: ASTH) operates a technology-powered healthcare platform that enables physicians to deliver coordinated care while successfully participating in value-based payment models.
Why Are We Fans of ASTH?
- Market share has increased this cycle as its 36.6% annual revenue growth over the last two years was exceptional
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 59.1%
- Earnings per share have massively outperformed its peers over the last five years, increasing by 19.6% annually
Astrana Health’s stock price of $31.96 implies a valuation ratio of 13.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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