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 9.8% gain for healthcare stocks has fallen short of the S&P 500’s 17.2% rise.

The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Keeping that in mind, here is one healthcare stock boasting a durable advantage and two that may face trouble.

Two Healthcare Stocks to Sell:

ICU Medical (ICUI)

Market Cap: $3.54 billion

Founded in 1984 and named for its initial focus on intensive care units, ICU Medical (NASDAQ: ICUI) develops and manufactures medical products for infusion therapy, vascular access, and vital care applications used in hospitals and other healthcare settings.

Why Should You Sell ICUI?

1. Sales trends were unexciting over the last two years as its 1.5% annual growth was below the typical healthcare company
2. Forecasted revenue decline of 8.5% for the upcoming 12 months implies demand will fall off a cliff
3. Free cash flow margin shrank by 11.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

ICU Medical is trading at $143.22 per share, or 19.3x forward P/E. Check out our free in-depth research report to learn more about why ICUI doesn’t pass our bar.

Mettler-Toledo (MTD)

Market Cap: $29.52 billion

With roots dating back to the precision balance innovations of Swiss engineer Erhard Mettler, Mettler-Toledo (NYSE: MTD) manufactures precision weighing instruments, analytical equipment, and product inspection systems used in laboratories, industrial settings, and food retail.

Why Is MTD Not Exciting?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
2. 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
3. Day-to-day expenses have swelled relative to revenue over the last two years as its adjusted operating margin fell by 1.4 percentage points

Mettler-Toledo’s stock price of $1,445 implies a valuation ratio of 32.6x forward P/E. Dive into our free research report to see why there are better opportunities than MTD.

One Healthcare Stock to Buy:

Natera (NTRA)

Market Cap: $28.53 billion

Founded in 2003 as Gene Security Network before rebranding in 2012, Natera (NASDAQ: NTRA) develops and commercializes genetic tests for prenatal screening, cancer detection, and organ transplant monitoring using its proprietary cell-free DNA technology.

Why Do We Love NTRA?

1. Average unit sales growth of 19.6% over the past two years reflects steady demand for its products
2. Adjusted operating profits increased over the last two years as the company gained some leverage on its fixed costs and became more efficient
3. Free cash flow margin is now positive, indicating the company has achieved financial self-sustainability

At $206.72 per share, Natera trades at 11.4x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

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