3 Healthcare Stocks We Think Twice About

October 03, 2025 at 00:35 AM EDT

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Personal health and wellness is one of the many secular tailwinds for healthcare companies. 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, the collective 6.5% gain for healthcare stocks has fallen short of the S&P 500’s 24.7% rise.

A cautious approach is imperative when dabbling in these businesses as regulation is another unpredictable element that can affect their earnings potential. On that note, here are three healthcare stocks that may face trouble.

Masimo (MASI)

Market Cap: $7.93 billion

Founded in 1989 to solve the "unsolvable problem" of accurate pulse oximetry during patient movement, Masimo (NASDAQ: MASI) develops and manufactures noninvasive patient monitoring technologies, including its breakthrough pulse oximetry systems that accurately measure blood oxygen levels even during patient movement.

Why Does MASI Give Us Pause?

Sales tumbled by 18.4% annually over the last two years, showing market trends are working against its favor during this cycle
Weak constant currency growth over the past two years indicates challenges in maintaining its market share
Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Masimo is trading at $143.13 per share, or 29.3x forward P/E. If you’re considering MASI for your portfolio, see our FREE research report to learn more.

Integra LifeSciences (IART)

Market Cap: $1.09 billion

Founded in 1989 as a pioneer in regenerative medicine technology, Integra LifeSciences (NASDAQ: IART) develops and manufactures medical technologies for neurosurgery, wound care, and surgical reconstruction, including regenerative tissue products and surgical instruments.

Why Do We Think IART Will Underperform?

Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 7.7 percentage points
Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 21 percentage points

Integra LifeSciences’s stock price of $14.10 implies a valuation ratio of 5.7x forward P/E. Read our free research report to see why you should think twice about including IART in your portfolio.

Agilent (A)

Market Cap: $39.32 billion

Originally spun off from Hewlett-Packard in 1999 as its measurement and analytical division, Agilent Technologies (NYSE: A) provides analytical instruments, software, services, and consumables for laboratory workflows in life sciences, diagnostics, and applied chemical markets.

Why Do We Think Twice About A?

Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.5% annually over the last two years
Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
Free cash flow margin dropped by 4.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up

At $131.70 per share, Agilent trades at 23.2x forward P/E. To fully understand why you should be careful with A, check out our full research report (it’s free).

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3 Healthcare Stocks We Think Twice About

Masimo (MASI)

Integra LifeSciences (IART)

Agilent (A)

High-Quality Stocks for All Market Conditions

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