In this article we discuss the 5 best medical stocks to invest in. If you want to read our detailed analysis of these companies, go directly to 10 Best Medical Stocks to Invest In.
5. Merck & Co., Inc. (NYSE: MRK)
Market Cap: $193.8 billion
Number of Hedge Fund Holders: 79
Merck & Co., Inc. (NYSE: MRK) is fifth on our list of best medical stocks to invest in. It is an American pharmaceutical company manufacturing medicines for some life-threatening diseases, such as cancer, HIV, Ebola, etc. The company is widely known for its philanthropic actions and spent nearly $3.1 billion philanthropic actions in 2019. Merck & Co., Inc. (NYSE: MRK) is one of the biggest companies with over 74,000 employees.
In Q1 2021, Merck & Co., Inc. (NYSE: MRK) reported a revenue of over $12 billion and $1.40 EPS, missing the market estimate of $1.63. The MRK stock has also shown consistent growth, gaining over 4.8% in the past year, and is ranked as ‘Overweight’ by JPMorgan, earlier in June. Merck & Co., Inc. (NYSE: MRK) also announced a quarterly dividend of $0.65 per share.
At the end of Q1 2021, 79 hedge funds tracked by Insider Monkey hold positions in Merck & Co., Inc. (NYSE: MRK), worth $6.4 billion.
Artisan Partners, an investment management firm, released its Q1 2021 investor letter and mentioned Merck & Co., Inc. (NYSE: MRK) in it. 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.”
4. Abbott Laboratories (NYSE: ABT)
Market Cap: $200.6 billion
Number of Hedge Fund Holders: 65
Abbott Laboratories (NYSE: ABT) is an American multinational medical company, which has operations in medical devices, diagnostics, and pharmaceuticals. The company has more than 109,000 employees, working in over 160 countries. It ranks fourth on our list of the best medical stocks to invest in.
In Q1 2021, Abbott Laboratories (NYSE: ABT) generated over $10.4 billion in revenue, up from $7.7 billion during the same period last year. The EPS stood at $1.32, beating the market estimate of $1.27. The diagnostic sector accounted for over $4.0 billion of the whole revenue, and the medical devices made $3.3 billion in sales. Abbott Laboratories (NYSE: ABT) expects the Covid-related revenue to reach over $4 billion due to its antigen-based Covid test, BinaxNow, which is approved by FDA.
BTIG, earlier in June, raised a price target on ABT stock to $140, rating the stock as a ‘Buy’. At the end of Q1 2021, 65 hedge funds have positions in Abbott Laboratories (NYSE: ABT), worth $5.1 billion.
Polen Capital, an investment management firm, has released its Q1 2021 investor letter and has mentioned Abbott Laboratories (NYSE: ABT) with other stocks. Here is what the firm has to say:
“Abbott Laboratories developed and commercialized multiple COVID tests during 2020, delivering a double-digit performance in what could have otherwise been a very challenging year. Management expects earnings per share to grow more than 30% in 2021. We believe it is poised to sustainably deliver double-digit earnings per share growth even as COVID testing sales decline from an expected $6.5-7.5 billion in the fiscal year 2021 to potentially as low as $300-$500 million several years from now.
We have always been believers in Abbott management’s capital allocation prowess, and we think they continue to invest prudently.
Management is taking advantage of the COVID test profits to invest roughly $2 billion into R&D and marketing to bolster growth in the core business as it recovers from the pandemic. We think there could even be a durable increase in the longer-term growth rates of both the diagnostics and medical device segments, given investments in product development and direct-to-consumer (DTC) capabilities. Testing sales created a windfall for Abbott in the near term, and management is exploiting it with what we view as sound capital allocation.
We believe the company continues to be fairly valued despite being rewarded for such favorable business momentum during the quarter.”
3. Pfizer Inc. (NYSE: PFE)
Market Cap: $218 billion
Number of Hedge Fund Holders: 65
Pfizer Inc. (NYSE: PFE) is a New York-based biopharmaceutical company that manufactures and sells medicines and vaccines for different medical fields such as oncology, cardiology, immunology, and neurology. The company became central to the Covid-19 vaccination process, along with BioNTech SE (NASDAQ: BNTX).
In Q1 2021, Pfizer Inc. (NYSE: PFE) generated $14.6 billion in revenues, showing 42% year-over-year growth. The EPS beat the market estimate of $0.77 and stood at $0.93. Pfizer Inc. (NYSE: PFE) sold vaccines worth $1.4 billion to the international market. The company expects the vaccine revenue to reach $26 billion in 2021. It has signed a $1.95 billion deal with the U.S. government for producing vaccines and has proved to be effective against the coronavirus variant, which is detected in India. This has certainly raised the PFE stock’s value, which has soared by 28.4% in the past year. Pfizer Inc. (NYSE: PFE) has announced a quarterly dividend of $0.39 per share and paid dividends worth $2.2 billion to shareholders in Q1.
At the end of Q1 2021, 65 hedge funds tracked by Insider Monkey has stakes in Pfizer Inc. (NYSE: PFE), up from 63 in the previous quarter. The total value of these stakes is over $2 billion.
ClearBridge Investments have mentioned Pfizer Inc. (NYSE: PFE) in their Q1 2021 investor letter with other stocks. Here is what the investment management 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.”
2. UnitedHealth Group Incorporated (NYSE: UNH)
Market Cap: $382 billion
Number of Hedge Fund Holders: 89
UnitedHealth Group Incorporated (NYSE: UNH) is second on our list of the best medical stocks to invest in. It is an American healthcare insurance company that provides medical services to its consumers, along with insurance services. The company currently employees over 330,000 people.
In Q1 2021, UnitedHealth Group Incorporated (NYSE: UNH) generated a revenue of over $69 billion, up from $64 billion during the same period last year, showing 7.3% growth. The EPS beat the market estimate of $4.38 and stood at $5.31. The UNH stock has also soared by 15% year to date and 41% in the past year. Due to the strong Q1 results, Argus Research raised the price target on the UNH stock to $450 per share and rated the stock as a ‘Buy’. UnitedHealth Group Incorporated (NYSE: UNH) has also announced a quarterly dividend of $1.45, raising the price by 16%.
At the end of the first quarter, 89 hedge funds tracked by Insider Monkey have stakes in UnitedHealth Group Incorporated (NYSE: UNH), worth over $12 billion.
Baron Funds, an asset management firm, recently released its Q1 2021 investor letter and mentioned UnitedHealth Group Incorporated (NYSE: UNH) in it. Here is what the firm has to say:
“Shares of UnitedHealth Group Incorporated reacted positively to more favorable 2021 guidance than previewed at the company’s December 2020 investor day. Medical costs returned to a seasonal baseline, inclusive of COVID-19-related impacts. We consider UnitedHealth a core holding and a way to play positive demographic, population health, and value-based reimbursement trends. Despite its size, we think the company can grow earnings at a mid-teens rate over the long-term.”
1. Johnson & Johnson (NYSE: JNJ)
Market Cap: $432 billion
Number of Hedge Fund Holders: 81
Johnson & Johnson (NYSE: JNJ) is an American medical corporation that develops and manufactures pharmaceuticals, medical equipment and devices, and consumer goods. It is one of the largest companies in the world with over 130,000 employees. Johnson & Johnson (NYSE: JNJ) remained a key player in producing Covid-19 vaccines which are approved by FDA.
In Q1 2021, Johnson & Johnson (NYSE: JNJ) reported revenue of over $22.6 billion, up 8% during the same period last year. The EPS stood at $2.59, beating the market estimate of $2.34. The pharmaceutical sales accounted for 9.6% of the revenue at $12.1 billion in Q1. This growth is attributed to the single-dose Covid-19 vaccine, listed for emergency use by WHO. Earlier in May, Morgan Stanley raised the price target on JNJ stock to $187, rating the stock as ‘Overweight’. Similarly, Wells Fargo also maintained an ‘Overweight’ rating on the stock.
At the end of Q1 2021, 81 hedge funds tracked by Insider Monkey have positions in Johnson & Johnson (NYSE: JNJ), worth $6.9 billion.
You can also take a peek at 10 Cheap Pharmaceutical Stocks For 2021 and 12 Best Telemedicine Stocks To Buy.
