Healthcare innovation is at the forefront of investment trends as companies push boundaries in biotechnology, medical devices, and pharmaceuticals. These innovators are developing groundbreaking solutions to address chronic diseases, improve patient outcomes, and streamline medical processes.
Below, I have highlighted three healthcare innovators: Zoetis Inc. (ZTS), Immatics N.V. (IMTX), and Esperion Therapeutics, Inc. (ESPR), which are well-positioned for potential upside gain.
Biotechnology companies are leading the charge, leveraging gene editing and immunotherapy to combat diseases once considered incurable, with the focus being on innovation-driven growth. According to the American Society of Gene and Cell Therapy (ASGCT), a total of 32 gene therapies and 34 RNA therapies have been approved globally by the third quarter of 2024.
Moreover, innovation in healthcare is active across multiple sectors. With that being said, medical device manufacturers are also an area of focus as they introduce new technologies to improve diagnostics and surgical procedures. From wearable health monitors to robotic surgery systems, these innovations are driving demand and revenue.
The global healthcare services market is projected to reach $22.57 trillion by 2031, growing at a CAGR of 8.3%. With robust pipelines and strategic partnerships, healthcare companies are well-positioned to thrive in an evolving healthcare landscape.
Given these factors, let’s delve deeper into the fundamentals of the above-mentioned stocks:
Zoetis Inc. (ZTS)
ZTS is a global animal health company that focuses on the discovery, development, manufacture, and commercialization of medicines, vaccines, diagnostic products and services, biodevices, genetic tests, and precision animal health.
On December 12, demonstrating its commitment to returning value to shareholders, the company declared a quarterly dividend of $0.50 per share, an increase of 16%, payable on March 4, 2025, to shareholders of record at the close of business on January 21, 2025.
ZTS pays an annual dividend of $2, which translates to a yield of 1.21% at the current share price. Its four-year average dividend yield is 0.73%. Moreover, the company’s dividend payouts have increased at an impressive CAGR of 20% over the past three years.
On September 26, ZTS and Danone SA together announced a joint business development plan to drive sustainable practices on dairy farms through the power of genetics for healthier cows. This strategic partnership aims to innovate the dairy industry’s approach to breeding for sustainability with ZTS’ genetic testing solutions.
During the third quarter that ended on September 30, 2024, ZTS’ revenue increased 11% year-over-year to $2.39 billion. It posted a non-GAAP gross profit of $1.69 billion, indicating an 11.4% increase from the prior-year quarter. In addition, its non-GAAP net income and non-GAAP EPS amounted to $716 million and $1.58, reflecting increases of 13.8% and 16.2% year-over-year, respectively.
The consensus revenue estimate of $2.33 billion for the fiscal fourth quarter (ending December 2024) represents a 5.2% increase year-over-year. The consensus EPS estimate of $1.36 for the same quarter indicates a 9.4% improvement year-over-year. The company has an excellent surprise history; it surpassed the consensus revenue estimates in each of the trailing four quarters.
ZTS’ EBIT has grown at CAGRs of 6.8% and 9.8% over the past three and five years, respectively. Likewise, the company’s diluted EPS has increased at a CAGR of 11.9% over the past three years.
ZTS shares have surged marginally intraday to close the last trading session at $164.70.
The 12-month median price target of $211 indicates a 28.1% upside potential from the last closing price. The price targets range from a low of $180 to a high of $248.
ZTS’ POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ZTS has a B grade for Stability, Sentiment, and Quality. It is ranked #21 out of 149 stocks in the Medical - Pharmaceuticals industry. Click here to see the additional ratings for ZTS (Growth, Value, and Momentum).
Immatics N.V. (IMTX)
Based in Tübingen, Germany, IMTX, a clinical-stage biopharmaceutical company, is focused on the research and development of potential T cell redirecting immunotherapies for the treatment of cancer. It is developing targeted immunotherapies with a focus on treating solid tumors through two distinct treatment modalities.
In the fiscal third quarter that ended on September 30, 2024, IMTX’s revenue from collaboration agreements increased 753.2% year-over-year to €50.56 million ($52.54 million). As of September 30, 2024, IMTX’s cash reached €189.19 million ($196.62 million), with total assets amounting to €577.23 million ($599.88 million) as of September 30, 2024.
Analysts expect IMTX’s revenue for the fiscal year (ending December 2024) to grow 107.4% year-over-year to $121.56 million.
Over the past three years, IMTX’s revenue and total assets grew at CAGRs of 59.5% and 42.6%, respectively.
The stock has gained marginally intraday to close the last trading session at $7.10.
Based on Wall Street analysts offering 12-month price targets for IMTX in the last three months, the average target price is $16.92, indicating a 138.3% change from the last price.
IMTX’s stance is apparent in its POWR Ratings. The stock has a B grade for Value and Sentiment. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
Among the 335 stocks in the Biotech industry, it is ranked #55. Click here to see the additional IMTX ratings (Growth, Momentum, Stability, and Quality).
Esperion Therapeutics, Inc. (ESPR)
ESPR, a pharmaceutical company, develops and commercializes medicines for the treatment of patients with elevated low-density lipoprotein cholesterol (LDL-C). Its marketed products include NEXLETOL and NEXLIZET tablets for treating primary hyperlipidemia in adults who require additional LDL-C lowering.
On December 12, ESPR announced that it has entered into a licensing agreement with Neopharm Israel for the exclusive rights to commercialize NEXLETOL® (bempedoic acid) and NEXLIZET® (bempedoic acid and ezetimibe) in Israel.
In this agreement, ESPR will receive an upfront payment and near-term milestones along with tiered royalties. This agreement should also expand ESPR’s global reach for cardiovascular and cardiometabolic diseases.
On September 3, ESPR announced additional commercial and medicare coverage for NEXLETOL® (bempedoic acid) and NEXLIZET® (bempedoic acid and ezetimibe). This addition provides access to more than 65% of medicare lives and more than 92% of commercially insured lives, allowing the healthcare providers to prescribe it to primary and secondary prevention patients easily.
For the nine-month period that ended on September 30, 2024, ESPR’s total revenues increased 213% year-over-year to $263.20 million. Its income from operation came in at $58.82 million compared to a year-ago net loss of $113.19 million. The company’s cash and cash equivalents and total assets came in at $144.72 million and $314.11 million as of September 30, 2024.
Street expects ESPR’s revenue for the fiscal fourth quarter (ending December 2024) to increase 92.7% year-over-year to $62.14 million. In addition, it surpassed the revenue estimates in three of the trailing four quarters, which is promising.
Moreover, ESPR’s revenue has grown at CAGRs of 59.6% and 14.9% over the past three and five years, respectively. In addition, its total assets increased at 11.7% CAGR over the past three years.
Over the past three months, the stock has surged 39.4%, closing the last trading session at $2.30.
Based on Wall Street analysts offering 12-month price targets for ESPR in the last three months, the average target price is $6.86, indicating a 198.3% change from the last price, with a high forecast of $16 and a low forecast of $2.05.
ESPR’s fundamentals are reflected in its POWR Ratings. The stock has a B grade for Growth, Value, and Quality. It is ranked #39 out of 335 stocks in the Biotech industry.
Beyond what is stated above, we’ve also rated ESPR for Momentum, Stability, and Sentiment. Get all ESPR’s ratings here.
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ZTS shares were trading at $165.04 per share on Thursday afternoon, up $0.34 (+0.21%). Year-to-date, ZTS has declined -15.55%, versus a 28.18% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
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