No one expected such a lucrative 2023 with the S&P climbing by over 20% by the year’s end after chasing the NASDAQ’s whopping 36%+ gain. The healthcare sector was one sector that completely underperformed.
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The sector’s lag creates an opportunity for several appealing pharmaceutical and medical technology companies to consider for 2024.
COVID-19 Aftermath
In short, the healthcare industry suffered from the aftermath of a long COVID vaccine marathon. The vast majority of investors sought opportunities within the health care sector and placed bets on some of the world’s leading pharmaceutical companies.
When Pfizer and Moderna were officially declared the winners of the race and COVID-19 concerns began to recede into the mist, naturally, investors flocked to more growth-oriented investments.
Health care companies were ultimately left high and dry. Revenues from medical device sales declined sharply, as hospitals cut budgets in line with our new economic environment. Meanwhile, inflation ate away at the value of the dollar while supply chains remained disrupted due to geopolitical conflicts around the globe.
Investors were not only overly bullish on tech sector stocks, but too frightened to gamble on what would have been easy wins in the health care sector.
Valuations of many health care companies thus remain attractive breeding opportunities for longer-term, more risk adverse investors.
Leading Drug-makers Staging a Comeback
Pfizer (NYSE:PFE), a pharmaceutical behemoth that championed the vaccine race, was arguably the hardest hit after 2022 as the share price faltered by over 26% from the highs of nearly $50 per share to a less than $28 dollars, while trading at a current p.e. of just 16.2.
As a world leader in pharmaceuticals, this is all about buying in at the right price.
Analysts foresee over 17% worth of upside coming up to $32.80 per share. Supporting this view, there is also insider buying activity at the director level as well.
Hedge funds also purchased over 619k shares last quarter when the stock was trading at higher valuations. Pfizer finally looks like it is bottoming out.
Bristol-Myers Squibb
In addition to Pfizer, another pharmaceutical behemoth that remains front and center for investors is, Bristol-Myers Squibb (NYSE:BMY).
Trading for just under $49 per share along with a price to earnings ratio at a low of 13.2, this dominant biopharmaceutical company is looking very attractive.
As one of the largest health care companies in the world possessing an arsenal of treatments for some of mankind’s most serious illnesses, Bristol-Myers Squibb is likely to add introduce more leading drugs to the market in the years to come.
Analysts are forecasting the share price to climb to $59.60 per share making for over 21% worth of upside, Chris Boerner, Bristol-Myer Squibb’s CEO, just bought thousands of dollars worth of shares as recently as December.
Moreover, hedge funds acquired over 2.2 million shares worth of Bristol-Myers Squibb last quarter.
Dividend insight wise, Bristol-Myers Squibb has a 52 year track record and a current dividend yield at 4.5%.
Technology Is Not Unique to the Magnificent Seven
While many investors flocked to A.I. names such as Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT), Medtronic (NYSE:MDT) was overlooked.
This medical technology titan is now trading at a bargain price for roughly $86 per share after trading for over $130 per share before experiencing the pains of supply-chain disruptions and hospital budgeting re-allocations.
Long-term, Medtronic presents plenty of upside as a leading medical device company. After all, our health remains our most precious possession and those wishing to live healthier will always require advanced technology and systems.
Analysts forecast a future share price of $90.57 per share and better yet, hedge funds have confidently snagged over 4.4 million shares of Medtronic last quarter.
Medtronic also provides shareholders with a reliable, growing yield currently at 3.17%.
The Time Is Now
Surely, 2024 will bring about a new economic environment full of its own uncertainties. However, investors can always count on sectors that remain paramount to their everyday lives – healthcare being one of them.
The best time to invest into stocks is when they are trading at bargain prices. That time is now for some of the industry’s leading health care companies like Pfizer, Bristol-Myers Squibb, and Medtronic.
