In this article, we discuss 5 best healthcare stocks to buy in 2022. If you want our detailed analysis of these stocks, go directly to 10 Best Healthcare Stocks To Buy In 2022.
5. Zimmer Biomet Holdings, Inc. (NYSE:ZBH)
Number of Hedge Fund Holders: 47
Zimmer Biomet Holdings, Inc. (NYSE:ZBH) is an Indiana-based company that manufactures medical devices such as orthopedic reconstructive products and surgical instruments.
On February 7, Zimmer Biomet Holdings, Inc. (NYSE:ZBH) reported earnings for the fourth quarter, posting an EPS of $1.95, missing estimates by $0.03. Zimmer Biomet Holdings, Inc. (NYSE:ZBH)’s revenue for the period was $2.04 billion, missing market consensus estimates by $28.63 million.
Zimmer Biomet Holdings, Inc. (NYSE:ZBH) announced on February 7 that its board declared a pro rata dividend of 80.3% of the outstanding common stock of ZimVie, the spinoff of its dental and spine businesses, to Zimmer Biomet Holdings, Inc. (NYSE:ZBH) shareholders of record on February 15. The dividend is payable on March 1.
Loop Capital analyst Jason Wittes lowered the price target on Zimmer Biomet Holdings, Inc. (NYSE:ZBH) on February 9 to $140 from $165 after its Q4 earnings miss and FY22 guidance but kept a Buy rating on the shares. The company has a more “conservative” approach to COVID-19 than its peers, assuming another full year of impact from the pandemic while its peers expect at least some easing in the second half of the year, the analyst told investors in a bullish thesis.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 47 funds were long Zimmer Biomet Holdings, Inc. (NYSE:ZBH), with stakes totaling $1.6 billion, as compared to 48 funds holding stakes in Zimmer Biomet Holdings, Inc. (NYSE:ZBH) worth $1.78 billion in the preceding quarter. Viking Global held the leading stake in the company as of September 2021, with 3.40 million shares valued at approximately $499 million.
4. Anthem, Inc. (NYSE:ANTM)
Number of Hedge Fund Holders: 59
Anthem, Inc. (NYSE:ANTM) offers health insurance in the United States and is the largest managed healthcare company in the Blue Cross Blue Shield Association. In Q3 2021, 59 hedge funds were bullish on Anthem, Inc. (NYSE:ANTM), with stakes totaling $4.5 billion. Eagle Capital Management held more than 2.5 million shares of Anthem, Inc. (NYSE:ANTM) as of September 2021, worth 949.4 million, making it the leading company stakeholder.
Anthem, Inc. (NYSE:ANTM) published on January 26 its Q4 results. The company posted earnings per share of $5.14, beating estimates by $0.02. Revenue for the period came in at $36.02 billion, up 14.22% year-on-year, but missed estimates by $436.76 million.
On February 7, Argus analyst Jasper Hellweg raised the price target on Anthem, Inc. (NYSE:ANTM) to $500 from $475 and kept a Buy rating on the shares. The company continues to benefit from rising enrollments in its government segment, rate increases, and the expansion of its in-house pharmacy benefit manager, and the shares are also “attractively valued”, according to the analyst.
Here is what Nomadic Value Partners has to say about Anthem, Inc. (NYSE:ANTM) in their Q4 2020 investor letter:
“In mid-December we sold our position in Anthem (NYSE: ANTM). At the end of Q3 the Blue Cross Blue Shield Association (BCBSA), the umbrella organization for “blues” across the country, made a preliminary proposal to settle a multi-year antitrust case for $2.67 billion. This payment is to be made proportionate by each BCBSA health plan. The BCBSA covers about 100 million members nationwide and ANTM represents about 40% of total BCBSA membership. ANTM’s proportionate payment could be a $1 billion charge, nearly 25% of its expected 2020 earnings. Interestingly, the share price rallied on the news because included in the settlement proposal was BCBSA agreeing to lift restrictions on local BCBS plan geographic boundaries. BCBS plans can begin to horizontally integrate and compete in markets historically excluded from reach.”
The more I’ve thought about ANTM’s position in this hypothetical marketplace the more I’ve become less optimistic on them. While consolidation certainly brings better economics to the surviving health plan, I think it is only realistically available to much smaller companies. Looking back at anti-trust cases within healthcare over the last decade, the large health insurance companies are generally blocked from major horizontal acquisitions. Why would this change? This leaves ANTM competing in an increasingly crowded marketplace and the only strategy left to grow is to supercharge their vertical integration. ANTM is behind in integration, and I don’t like situations where a company is being forced to play catch up.”
3. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 63
Headquartered in Illinois, Abbott Laboratories (NYSE:ABT) is a multinational company providing branded generic medicines, medical devices, diagnostic assays, and nutritionals.
On January 26, Abbott Laboratories (NYSE:ABT) reported its Q4 results. The company posted earnings per share of $1.32, exceeding estimates by $0.11. Abbott Laboratories (NYSE:ABT)’s fourth quarter revenue came in at $11.47 billion, up 7.17% year-over-year, outperforming estimates by $760.41 million.
Abbott Laboratories (NYSE:ABT) on December 10 declared a $0.47 per share quarterly dividend, which is a 4.4% increase from its prior dividend of $0.45. The dividend will be paid on February 15, to shareholders of record on January 14.
Raymond James analyst Jayson Bedford on January 27 lowered the price target on Abbott Laboratories (NYSE:ABT) to $143 from $150 and kept an Outperform rating on the shares. According to the analyst, Abbott Laboratories (NYSE:ABT)’s base business was up 10% year-on-year in Q4 and this momentum is expected to continue into 2022, owing to exposure to two of the fastest growing medical tech markets, namely diabetes and structural heart.
Among the hedge funds tracked by Insider Monkey, 63 funds were bullish on Abbott Laboratories (NYSE:ABT) in Q3 2021, with stakes totaling $3.6 billion, as compared to 61 funds holding stakes worth $4.3 billion in Abbott Laboratories (NYSE:ABT) in the quarter earlier.
Here is what Saturna Capital Sextant Funds has to say about Abbott Laboratories (NYSE:ABT) in its Q3 2021 investor letter:
“Last quarter, Abbott Labs was among the top detractors as it sharply cut guidance on the expectation of fewer COVID-19 test kit sales. That conclusion turned out to be premature and was, in any event, short-term in nature.”
2. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 81
AbbVie Inc. (NYSE:ABBV) is a biopharmaceutical company providing medical products and clinical trials focused on immunology, oncology, neuroscience, eye care, and virology.
On February 2, AbbVie Inc. (NYSE:ABBV) reported earnings for the fourth quarter. The company posted an EPS of $3.31, beating estimates by $0.03. The $14.89 billion revenue missed estimates by roughly $73 million.
Mizuho analyst Vamil Divan raised the price target on AbbVie Inc. (NYSE:ABBV) on February 4 to $166 from $154 and kept a Buy rating on the shares. The analyst said that AbbVie Inc. (NYSE:ABBV)’s “more diversified growth story” beat expectations in Q4. He continues to see AbbVie Inc. (NYSE:ABBV) as a Top Pick.
AbbVie (NYSE:ABBV) declared on October 29 a $1.41 per share quarterly dividend, which is an 8.5% increase from its prior dividend of $1.30. The dividend is payable on February 15, to shareholders of record on January 14.
Warren Buffett’s Berkshire Hathaway held the biggest stake in AbbVie (NYSE:ABBV) in Q3 2021, with 14.3 million shares worth $1.5 billion. Overall, 81 hedge funds were bullish on AbbVie (NYSE:ABBV) in the third quarter of 2021, with stakes totaling $4.1 billion, as compared to 82 funds holding stakes in AbbVie (NYSE:ABBV) worth $5.3 billion in the preceding quarter.
Here is what Miller Howard Investments has to say about AbbVie Inc. (NYSE:ABBV) in its Q3 2021 investor letter:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) AbbVie (ABBV). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 95
UnitedHealth Group Incorporated (NYSE:UNH) is a Minnesota-based multinational insurance and managed healthcare company. UnitedHealth Group Incorporated (NYSE:UNH) is one of the most popular healthcare stocks among smart investors, with 95 funds holding stakes in the company as of Q3 2021, worth $11.70 billion.
UnitedHealth Group Incorporated (NYSE:UNH) posted Q4 results on January 19, announcing earnings per share of $4.48, beating estimates by $0.17. The $73.74 billion revenue outperformed estimates by $774.36 million.
On December 2, UnitedHealth Group Incorporated (NYSE:UNH) declared a quarterly dividend of $1.45 per share, in line with previous. The dividend was paid on December 14, to shareholders of record on December 6.
SVB Leerink analyst Whit Mayo raised the price target on UnitedHealth Group Incorporated (NYSE:UNH) to $550 from $480 and kept an Outperform rating on the shares on January 26. The analyst noted that results from Q4 were largely as expected. Against potential fading COVID-19 and political risks, Mayo can see the stock pushing a premium against the S&P 500.
Rajiv Jain’s GQG Partners, the biggest stakeholder of the company, held 3.6 million UnitedHealth Group Incorporated (NYSE:UNH) shares in Q3 2021, worth $1.4 billion.
Here is what Third Point Management has to say about UnitedHealth Group Incorporated (NYSE:UNH) in its Q3 2021 investor letter:
“UnitedHealth is one of the largest healthcare companies in the world and a market leader in both its insurance and healthcare services (Optum) businesses. We initiated our position during the 2020 Presidential election at a time of heightened political and regulatory uncertainty.
We believe under its new CEO, Andrew Witty, UnitedHealth can not only preserve its market dominance and sustain industry-leading growth rates across most of its key segments but also enter new healthcare services markets. Witty is known as a mission-driven CEO who clearly articulates his view that providing high-quality, affordable health care services is a social good. He receives consistently high marks from former colleagues, and we believe that his leadership approach will ballast and even strengthen UNH’s already impressive management and employee ranks. The insurance and services businesses are synergistic and complementary, which entrenches United’s critical role in care financing, access, and management. This dynamic gives us confidence in the durability of United’s market leadership…” (Click here to see the full text)
You can also take a look at Analysts are Recommending These 10 Stocks for 2022 and 10 Best High Dividend Stocks in Canada for 2022.
