For value investors looking to take a “break” from the euphoric technology stocks, many of which may have soared above and beyond your estimate of intrinsic value, the healthcare scene stands out as an intriguing place to bet on. Indeed, rotating cash from scorching-hot winners into some relatively lukewarm winners that are more attractively priced can make a lot of sense.
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Though I would not give up on tech, I would encourage investors to be more price-selective. You don’t need to pay a high-double-digit multiple for exposure to a fast grower, especially if you’re willing to embrace the healthcare scene.
This piece will use TipRanks’ Comparison Tool to go over three healthcare stocks—REGN, CI, BSX—with Strong Buys given by the analyst community.
Regeneron (NASDAQ:REGN)
Regeneron is an innovative biotech firm with a large market cap ($111.3 billion) and a lofty quadruple-digit share price long overdue for a split. The company has a healthy pipeline of offerings covering various ailments, including inflammation-related diseases, ocular diseases, cancer, and liver disease.
Indeed, you’re covering many bases with a sizeable biotech stock that only seems to get more attractive the longer you hold it. With intriguing catalysts on the horizon and a still modest valuation, I’m inclined to stand with Wall Street with a bullish position on the name.
At writing, shares are at fresh all-time highs, just north of $1,000 per share. What’s behind the impressive run?
Certainly not the latest (first) quarter, which fell short of the mark (earnings per share of $9.55 vs. $10.17 consensus). However, investors were quick to forgive the soft earnings as they set their sights on the road ahead.
Up ahead, some of Regeneron’s top growers could continue to flex their muscles. Dupixent (for inflammation) and Libtayo (an immunotherapy drug for treating various forms of cancer) saw sales rocket by 24% and 45% year-over-year. These, along with Eylea (for eye disease), are meaningful growth drivers that have analysts eyeing new highs for REGN stock.
In the second half of the year, perhaps the trio of drugs could help Regeneron deliver an upside surprise after a modest but still respectable first-quarter showing. At 22.9 times forward price-to-earnings (P/E), you’re getting a huge discount to the biotech industry average of 38.1 times.
What Is the Price Target of REGN Stock?
REGN stock is a Strong Buy, according to analysts, with 17 Buys, two Holds, and one Sell assigned in the past three months. The average REGN stock price target of $1,074.22 implies 4.5% upside potential.
Cigna (NYSE:CI)
Cigna is a health services provider that may not be as exciting as a fast-moving biotech like REGN. Still, the company has done a fantastic job of navigating industry headwinds that have really eaten into rivals’ share prices. Indeed, the managed health space is not a great place for investors these days. Despite the tougher terrain, Cigna’s management has done a stellar job of swimming against the tide. Smart acquisitions are a major reason why.
As Cigna sets its laser sights on small tuck-in deals rich with synergies, I’d not dare bet against CI stock. Cigna looks like a winner that has what it takes to build distance between itself and its rivals.
Though Cigna could prove its case for gobbling up a behemoth by unlocking cost savings for customers, Cigna seems content with “bolt-on” types of deals in the meantime. Plus, regulators really seem to be cracking down on super-sized mergers, regardless of the industry. Perhaps there’s more hidden value to be had in the corners of the health insurance scene where fewer people are looking.
Either way, Cigna is a great company that’s eating its own cooking, with a $10 billion buyback announced at the end of last year (which it has been advancing). The buybacks will likely be effective value creators, given that CI stock looks cheap and that significant strides have been made over peers in recent years. At writing, CI stock goes for 11.9 times forward P/E, just below the healthcare plan industry average of 13.1 times.
What Is the Price Target of CI Stock?
CI stock is a Strong Buy, according to analysts, with 11 Buys and two Holds assigned in the past three months. The average CI stock price target of $395.00 implies 17.5% upside potential.
Boston Scientific (NYSE:BSX)
Boston Scientific stock is a medical device maker that’s in the new all-time high list, with the stock going for just over $77 per share, up more than 50% in the past year alone. But just because BSX stock is going parabolic doesn’t mean it’s time to ring the register, though — not while the innovative med-tech company looks to launch new products that could bolster growth. Though I wish Boston Scientific were a tad cheaper, I can’t help but stay bullish as we go into what’s sure to be an eventful second half of the year.
Boston Scientific’s first-quarter results were spectacular, with net sales surging nearly 14% to $3.86 billion. That’s some pretty healthy growth from a $113 billion company. For the full year, management is guiding sales to grow in the 11-13% range, up markedly from the original 8.5-9.5% guide.
If new products really hit the spot, I wouldn’t be surprised if net sales overshot the freshly hiked guidance. Up ahead, the FARAPULSE device for treating irregular heartbeats stands out as a notable catalyst. Add operational efficiency efforts into the equation, and the rest of the year may just be better than expected.
Just how much of said catalysts are baked in? At 33.2 times forward P/E, likely quite a few. That said, the company seems more than worth paying a pretty penny for, if not for FARAPULSE’s potential, perhaps for the solid product pipeline and management’s track record of delivering.
What Is the Price Target of CI Stock?
BSX stock is a Strong Buy, according to analysts, with 21 Buys and one Holds assigned in the past three months. The average BSX stock price target of $82.15 implies 6.1% upside potential.
The Takeaway
There are plenty of GARP (growth at a reasonable price) types of stocks in the healthcare scene right now. Whether you’re looking to play biotech, health insurance, or med-tech, there are great names that have the confidence of Wall Street analysts. Of the trio, analysts see the most upside potential (17.5%) in CI stock.
