We recently published a list of 10 Best Medical Stocks to Buy Now. In this article, we are going to take a look at where AbbVie Inc. (NYSE:ABBV) stands against other best medical stocks to buy now.
Navigating the Healthcare Landscape: Investment Opportunities and Growth Trends
The medical and healthcare industry is one of the largest globally, with a steady demand for products and services due to the biological nature of humans. Stocks like Pfizer Inc. (NYSE:PFE) and Tenet Healthcare Corporation (NYSE:THC) are among the biggest in the world, benefiting from trends that arise during crises like the coronavirus pandemic. Following the pandemic’s rapid spread in 2020, investors were eager to identify the best medical stocks to navigate the global healthcare crisis.
This industry is highly capital-intensive and competitive, encompassing various subsectors, including pharmaceutical companies, healthcare plan providers, medical equipment manufacturers, and hospitals. While healthcare plan providers and pharmaceutical firms often capture consumer attention, hospitals tend to be overlooked, despite their status as publicly traded entities. According to McKinsey, the medical industry’s overall profits are projected to grow at a compound annual growth rate (CAGR) of 4%, increasing from $654 billion in 2021 to $790 billion by 2026. Notably, the hospital sector is expected to grow at a remarkable CAGR of 12.5%, reaching $2 trillion by 2028. Similarly, the pharmaceutical manufacturing segment, valued at $358 billion in 2020, is forecasted to surge to $1.2 trillion by 2030, reflecting a CAGR of 13%.
Over time, medical companies such as Pfizer and Moderna, Inc. (NASDAQ:MRNA), a biotechnology company based in Cambridge, Massachusetts, were among the most sought-after due to their vaccines. On the stock market, Moderna’s shares increased by an astounding 429% between December 2019 and September 2021. This outcome demonstrates that even modest wagers placed at the ideal moment can provide investors from all backgrounds with large returns. During the same period, Pfizer’s stock saw a more moderate 50% gain; nevertheless, the gap in gains is comprehensible given that Pfizer currently has a market value of more than four times that of Moderna, at $155 billion.
Our Methodology
For our methodology, we first sifted through the US pharmaceutical, medical devices, and healthcare ETFs and selected stocks that were weighted the highest. After choosing these stocks, we ranked them based on their total number of hedge fund holders as of Q2 2024.
“Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).”
A pharmacist handing out a pharmaceutical drug to a patient in a drug store or chemist.
AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 67
AbbVie Inc. (NYSE:ABBV) is a pharmaceutical company with a significant focus on immunology and oncology. Its next-generation immunology drugs, Skyrizi and Rinvoq, are driving growth despite biosimilar competition for the older drug Humira. Both Skyrizi and Rinvoq are expected to grow due to their leading efficacy in major immunology indications and have patent protection until the early/mid-2030s. Additionally, AbbVie’s strong aesthetics business, led by Botox, benefits from long product cycles due to brand strength and physician loyalty.
AbbVie Inc. (NYSE:ABBV) is projected to achieve mid-single-digit sales growth over the next three years, due to limited patent losses. Additionally, the $10 billion acquisition of ImmunoGen, which added the antibody-drug conjugate Elahere to its oncology portfolio, is expected to contribute significantly, with sales anticipated to exceed $2 billion by the end of the decade, according to Barclays.
In Q2 2024, AbbVie Inc. (NYSE:ABBV)’s worldwide revenues reached $14.462 billion, marking a 4.3% increase reported and 5.6% operational growth compared to Q2 2023, exceeding Wall Street expectations by 3.1%. The growth was largely driven by its immunology portfolio, with Skyrizi sales rising nearly 45% to $2.7 billion and Rinvoq sales increasing almost 56% to $1.4 billion. Additionally, the oncology portfolio saw a 10.5% increase in global sales, reaching $1.6 billion. However, this growth was partially offset by a 29.8% decline in Humira sales, which fell to $2.8 billion due to competition from biosimilars.
As of Q2 2024, from the total hedge funds tracked by Insider Monkey, 67 hedge funds held stakes in the stock with Citadel Investment Group being the largest stakeholder with 2,617,800 shares worth $449,005,056. 15 Wall Street analysts have set a 12-month price target for AbbVie, averaging $199.57. The forecasts range from a high of $218.00 to a low of $170.00, indicating a potential 4.4% increase from the current price of $191.16.
Overall, ABBV ranks 7th on our list of best medical stocks to buy now. While we acknowledge the potential of ABBV as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ABBV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.