Abbott Laboratories (ABT), Eli Lilly & Co. (LLY): Healthcare Stocks to Consider Buying

Going forward, the company expects 2013 revenue to amount to $23 billion. Gross-margin guidance was also pegged at 78%. I believe that much of the growth in coming years will come come from reinvestments from sales in the animal health division, as well as business from the Japanese market and emerging economies. Eli Lilly & Co. (NYSE:LLY) is also positioned to accelerate growth in its leading products, such as Alimta, and Humulin, among others.

And it will certainly need all of the acceleration it can get. Patent rights for the Zyprexa drug have been lost and generics are already posing competition that have crushed sales. The company will also lose patent rights in the United States for the drug Cymbalta at the close of the year. But Eli Lilly & Co. (NYSE:LLY)’s balance sheet is quite strong, so investors should be confident that the company will be able to fund its 2013 capital expenditure, which amounts to $900 million and active R&D expenditures.

Conclusion

Abbott Laboratories (NYSE:ABT) and Lilly offer very different risks and potential rewards. The former trades at 15.8x forward earnings versus 18.8x for the latter. However, Abbott Laboratories (NYSE:ABT) is less of a pharmaceutical producer now and is need of some added stability post-split. Return on invested capital is still strong at 14.8%, so the company has room to create value by increasing exposure to new sectors. Eli Lilly & Co. (NYSE:LLY) already has growth catalysts in place, so it is less likely to experience positive or negative surprises in the near-term.

The article Healthcare Stocks to Consider Buying originally appeared on Fool.com and is written by David Gould.

David Gould has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. David is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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