In this article, we discuss the 5 best healthcare stocks to invest in according to hedge funds. If you want to read our detailed analysis of the healthcare industry, go directly and see the 11 Best Healthcare Stocks To Invest In.
5. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 67
In Q2, Pfizer Inc. (NYSE:PFE) presented a positive hedge fund sentiment as 67 hedge funds tracked by Insider Monkey reported owning stakes in the company, up from 65 in the previous quarter. The total value of these stakes is over $2.35 billion.
Recently, Morgan Stanley lifted its price target on Pfizer Inc. (NYSE:PFE) to $48, with an Equal Weight rating on the shares. The firm also raised its 2022 EPS estimates to $4.57, driven by the company’s strong vaccine operations.
Kahn Brothers is the leading shareholder of Pfizer Inc. (NYSE:PFE) in Q2, owning shares worth $32.2 billion.
ClearBridge Investments published its Q1 2021 investor letter and mentioned Pfizer Inc. (NYSE:PFE) in it. Here is what the firm has to say:
“Our underweights in health care and staples contributed to relative performance during the period. As we continue to focus the portfolio on high-conviction ideas, we sold Pfizer in late 2020, in the health care sector.”
4. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 68
Medtronic plc (NYSE:MDT) is an American-Irish medical device company and is a global leader in medical technology.
Diamond Hill Capital is the largest shareholder of Medtronic plc (NYSE:MDT), with over 4.6 million shares. Of the 873 hedge funds tracked by Insider Monkey, 68 hedge funds reported having stakes in Medtronic plc (NYSE:MDT) in Q2, up from 65 in the previous quarter. The total worth of these stakes is over $3.3 billion.
Recently, Morgan Stanley raised its price target on Medtronic plc (NYSE:MDT) to $154, with an Overweight rating on the shares.
3. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 79
Merck & Co., Inc. (NYSE:MRK) plans to double the manufacturing capacity of its Covid-19 pill, reaching 20 million courses, and has secured deals with New Zealand, Singapore, Australia, and South Korea to supply its doses.
In Q2, Merck & Co., Inc. (NYSE:MRK) reported revenue of $11.4 billion, showcasing a 21.9% growth from the prior-year quarter and beating the estimates by $200 million. In October, SVB Leerink lifted its price target on Merck & Co., Inc. (NYSE:MRK) to $105, with an Outperform rating on the shares.
At the end of Q2, 79 hedge funds tracked by Insider Monkey were bullish on Merck & Co., Inc. (NYSE:MRK), the same as in the previous quarter. These stakes are valued at $5.2 billion.
Artisan Partners mentioned Merck & Co., Inc. (NYSE:MRK) in its Q1 2021 investor letter. Here is what the firm has to say:
“In Q1, we initiated a position in Merck, a provider of health care solutions including prescription medicines, vaccines, biologic therapies, animal health and consumer care products. We purchased Merck when the stock came under pressure in part on concerns that the newly minted Biden administration could implement regulatory changes and lower drug costs in the pharmaceutical industry. Recent, but anticipated changes to Merck’s management team have also weighed on shares, as have concerns over the company’s heavy reliance on immunotherapy treatment Keytruda. Notably, Merck is not getting much credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future partnerships and acquisitions. While Merck is undergoing a period of transition, we think the company’s fundamentals are strong and believe changes to management should be a catalyst for improvement.”
2. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 88
Johnson & Johnson (NYSE:JNJ) gained ground among investors due to its Covid-19 vaccine operations. On October 21, the healthcare company’s board announced a quarterly dividend of $1.06 per share. The stock has a dividend yield of 2.5%.
At the end of Q2, 88 hedge funds tracked by Insider Monkey reported having stakes in Johnson & Johnson (NYSE:JNJ), valued at over $7.05 billion. In the previous quarter, 81 hedge funds had positions in the company, highlighting a positive hedge fund sentiment. Fundsmith LLP is the leading shareholder of Johnson & Johnson (NYSE:JNJ) in Q2, with shares worth over $1.1 billion.
Johnson & Johnson (NYSE:JNJ) announced its Q3 results on October 19 and posted an EPS of $2.60, beating the estimates by $0.25.
Distillate Capital mentioned Johnson & Johnson (NYSE:JNJ) in its Q2 2021 investor letter. Here is what the firm has to say:
“The largest additions in the rebalance, Johnson & Johnson was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 105
UnitedHealth Group Incorporated (NYSE:UNH) reported its Q3 2021 results on October 16 and posted an EPS of $4.52, beating the estimates by $0.10. The company reported revenue of $72.3 billion, showcasing an 11.1% growth from the prior-year quarter. UnitedHealth Group Incorporated (NYSE:UNH) remains one of the best healthcare stocks to invest in.
On August 11, UnitedHealth Group Incorporated (NYSE:UNH) declared a quarterly dividend of $1.45 per share, yielding 1.41%. The company has a track record of 12 years of consistent dividend growth. Recently, Wells Fargo lifted its price target on UnitedHealth Group Incorporated (NYSE:UNH) to $520, with an Overweight rating on the shares, showing confidence in the company’s earnings momentum.
At the end of Q2, 105 hedge funds tracked by Insider Monkey reported having stakes in UnitedHealth Group Incorporated (NYSE:UNH), up from 89 in the previous quarter. The total value of these stakes is over $13.1 billion.
ClearBridge Investments mentioned UnitedHealth Group Incorporated (NYSE:UNH) in its Q2 2021 investor letter. Here is what the firm has to say:
“A good way to conceptualize how we think about portfolio construction is to picture a pyramid. At the bottom of the pyramid are the durable compounding growth companies that form the strong foundation, resilience and consistency for the Strategy. We think these companies should comprise just under half of portfolio assets and feature annual revenue growth rates ranging from two times GDP up to 20% as well as healthy free cash flow generation.
UnitedHealth Group, a name we have owned in the Strategy since 1992, is a good example of a long-term compounder, having grown its revenue base from approximately $600 million to north of $260 billion over that time frame. It remains constantly focused on investing in new growth drivers such as telemedicine and health care analytics. Broadcom and Comcast have delivered similar long-term appreciation through a combination of organic growth, capital deployment into new and adjacent opportunities through merger and acquisition activity as well as returning capital to shareholders through buybacks and dividends.”
You can also take a look at 10 Best Healthcare Dividend Stocks and 10 Cheap Healthcare Stocks To Buy Now
