In this article, we discuss the top 15 healthcare stock picks of Ken Fisher. If you want to skip our detailed discussion about the healthcare industry, head directly to Ken Fisher’s Top 5 Healthcare Stock Picks.
The healthcare sector was forever changed by the COVID-19 pandemic. While it highlighted the weaknesses in the global medical supply chains, the medical industry exhibited tremendous commitment and resilience in its pursuit to fight the global pandemic. This has since led to the need for sustainability and innovation throughout the industry. The global healthcare industry was effective in treating the pandemic with its mRNA vaccines. However, the demand for these vaccines has naturally declined since then. According to Precedence Research, the global biotech industry was valued at $1.2 trillion in 2022 and is expected to grow roughly 12% per annum over the next 7 years, reaching $3.2 trillion by 2030.
While the healthcare industry foresees normalization this year to pre-pandemic levels, Deloitte expects the United States spending in the sector to increase up to $12 trillion by 2040. With the global focus on artificial intelligence, numerous biotech companies are exploring applications in workforce and patient management. Similarly, the technological advancements in medical equipment for minimally invasive procedures has a positive impact on patient recovery, through smaller incisions that are less damaging to muscle and tissue. BlackRock reported that it forecasts the minimally invasive market to be valued at $76 billion by 2027. Moreover, drug development also presents a promising future. With over 55 million Alzheimer’s patients, a new antibody treatment slowed the rate of cognitive decline by 27%. As these studies and clinical trials continue, the pharmaceutical industry is poised for more research, development, and innovation.
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While on the correct path, the industry still faces a number of challenges. According to Deloitte, the first major challenge has been the digital transformation in the healthcare sector. The pandemic presented an opportunity for low-cost and safe remote interactions. However, this also showcased the need for virtual health records and data management, through cloud-based solutions. In addition to electronic health records, the adoption of telemedicine can improve the organizational efficiency and cater to the labor shortages that the industry has lately experienced. Moreover, the global healthcare industry will need over 80 million additional workers by 2030. This has further stressed upon the need for ‘hospitals from home’. LBMC, a professional services CPA firm, reported that the global market for telehealth was valued in excess of $48 billion in 2022 and it is expected to grow over $57 billion in 2023. To supplement telehealth, there is a growing need for healthcare devices for remote monitoring, such as health bands.
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Ken Fisher of Fisher Asset Management is one of the leading investment analysts in the world, with a net worth in excess of $6.8 billion. Last year, when the S&P 500 was down by 18%, Fisher predicted the market would rise after the midterm elections. According to Fisher, since 1925, the fourth quarter for every time a midterm election has been held, the stock market has delivered positive results 83% of the time. For 2023, he expects the market to be led by “high quality mega-tech” stocks. Fisher explained that after the midterm election, investor confidence grows and the market is less risk-averse. He further explained that historically, the later half of the year, although less profitable than the first half of the year, continues to perform better than the normal market. While normally stocks rise 60%-70% of the time, in the midterm election year, stocks have reflected a 92% increase, historically. As inflation slowly declines and the US economy grows gradually, Fisher expects the market to remain positive, heading into 2024.
In this article, we discuss some of Ken Fisher’s top stock picks in the healthcare sector including Merck & Co., Inc. (NYSE:MRK), Intuitive Surgical, Inc. (NASDAQ:ISRG), and Eli Lilly and Company (NYSE:LLY).
Our Methodology
We used Fisher Asset Management’s Q2 2023 portfolio and selected the 15 biggest positions in healthcare firms during the quarter for this list. We have mentioned Fisher Asset Management’s stake value and the hedge fund sentiment towards each stock as of the second quarter of 2023. The list is ranked in the ascending order of the firm’s stake value in each holding.
Ken Fisher’s Top Healthcare Stock Picks
15. Medtronic plc (NYSE:MDT)
Fisher Asset Management’s Stake Value: $287,604,000
Number of Hedge Fund Holders: 63
Medtronic plc (NYSE:MDT) is a biotechnology company that focuses on the research, development, manufacture, and commercialization of medical devices. Focused on the cardiovascular segment, the company also offers software solutions for remote monitoring. On August 17, Medtronic plc (NYSE:MDT) declared a quarterly dividend per share of $0.69. The dividend is payable on October 13 to shareholders on record as of September 22. At the end of Q2 2023, Fisher Asset Management held 3.2 million shares of Medtronic plc (NYSE:MDT) worth $287.6 million.
According to Insider Monkey’s second quarter database, 63 hedge funds were bullish on Medtronic plc (NYSE:MDT), in contrast to 52 funds from the previous quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest shareholder in the company, with 5.5 million shares worth $484.2 million.
Like Merck & Co., Inc. (NYSE:MRK), Intuitive Surgical, Inc. (NASDAQ:ISRG), and Eli Lilly and Company (NYSE:LLY), Medtronic plc (NYSE:MDT) is one of the top healthcare stock picks of Ken Fisher.
Appleseed Fund said this about Medtronic plc (NYSE:MDT) in its Q1 2023 investor letter:
“During the most recent quarter, Appleseed Fund added three new equity holdings: Medtronic plc (NYSE:MDT), Stanley Black & Decker (SWK), and Synovus Financial (SNV). Medtronic is the world’s largest device manufacturer, and it holds the number one or number two market share in most of its product segments. Medtronic’s business is heavily weighted towards complicated in-patient procedures, which are typically quite profitable. Industry dynamics are quite attractive with an aging global population and the growth of improved healthcare in emerging markets; furthermore, most of its segments are highly concentrated with just 2-3 players that split each segment’s market share, affording the key participants with significant economies of scale and pricing power. The Company has been recently addressing several temporary headwinds including a strong dollar, inflation, a delayed recovery in surgical volumes from the coronavirus pandemic, and supply chain issues. Once these issues reach the rearview mirror, the Company’s growth and margin expansion plans should transform into reality.”
14. GSK plc (NYSE:GSK)
Fisher Asset Management’s Stake Value: $492,994,000
Number of Hedge Fund Holders: 35
GSK plc (NYSE:GSK) is one of the leading pharmaceutical companies in the world, engaged in manufacturing medicines and vaccinations. Securities filings for Q2 2023 reveal that Fisher Asset Management held 13.8 million shares of GSK plc (NYSE:GSK) worth nearly $493 million. On July 26, GSK plc (NYSE:GSK) announced a Q2 non-GAAP EPS of 38.80p, along with a revenue of £7.18 billion. It is one of Ken Fisher’s top healthcare picks.
According to Insider Monkey’s second quarter database, 35 hedge funds were bullish on GSK plc (NYSE:GSK), as opposed to 33 hedge funds in the preceding quarter. Brandon Haley’s Holocene Advisors held a prominent stake in the company, with 2.9 million shares worth $103.9 million.
Ariel Investment said this about GSK plc (NYSE:GSK) in its Q3 2022 investor letter:
“By comparison, health care leader GSK plc (NYSE:GSK) was the largest detractor from performance in the quarter. Investors are concerned about legal liabilities associated with its antacid drug Zantac. While it is impossible to know the outcome with certainty, our preliminary assessment suggests that the decline in market capitalization exceeds the likely financial impact on the company.”
13. Roche Holding AG (OTC:RHHBY)
Fisher Asset Management’s Stake Value: $549,964,000
Number of Hedge Fund Holders: 2
Roche Holding AG (OTC:RHHBY) is a multinational pharmaceutical company that has operations in Switzerland, Germany, and the United States. The company is involved in producing treatment therapies for neurology, cancer, and other infectious diseases. On July 27, Roche Holding AG (OTC:RHHBY) announced a 1H non-GAAP EPS of CHF10.10, and a revenue of CHF29.78 billion. At the end of Q2 2023, Fisher Asset Management held 14.4 million shares of Roche Holding AG (OTC:RHHBY) valued at approximately $550 million.
According to Insider Monkey’s second quarter database, 2 hedge funds were bullish on Roche Holding AG (OTC:RHHBY). This remained unchanged from the previous quarter.
This is what Harding Loevner International Equity ADR Fund has to say about Roche Holding AG in its Q4 2021 investor letter:
“Health Care boosted relative performance as our holdings benefitted from the pandemic both coming and going. Roche and Lonza saw heightened interest in treatment, testing, and vaccination activities to battle the waves of newer COVID-19 variants.
12. AstraZeneca PLC (NASDAQ:AZN)
Fisher Asset Management’s Stake Value: $639,328,000
Number of Hedge Fund Holders: 41
AstraZeneca PLC (NASDAQ:AZN) is another pharmaceutical giant with operations worldwide. The company focuses on the research, development, and production of prescription medicines. On July 28, AstraZeneca PLC (NASDAQ:AZN) announced a Q2 non-GAAP revenue of $11.42 billion and an EPS of $2.15, surpassing estimates by $400 million and $1.18, respectively. At the end of Q2 2023, AstraZeneca PLC (NASDAQ:AZN) was one of the top healthcare picks of Ken Fisher, with the billionaire holding a $639.3 million stake.
According to Insider Monkey’s second quarter database, 41 hedge funds were bullish on AstraZeneca PLC (NASDAQ:AZN). In comparison, 39 hedge funds had invested in the company during the last quarter. Rajiv Jain’s GQG Partners held the largest position in AstraZeneca PLC (NASDAQ:AZN), with 21.2 million shares worth $1.52 billion.
Baron Health Care Fund said this about AstraZeneca PLC (NASDAQ:AZN) in its Q1 2023 investor letter:
“We reduced our position in AstraZeneca PLC (NASDAQ:AZN) ahead of a clinical data read-out of a competitor drug that would compete with one of the company’s important drugs.”
11. Sanofi (NASDAQ:SNY)
Fisher Asset Management’s Stake Value: $698,372,000
Number of Hedge Fund Holders: 30
Sanofi (NASDAQ:SNY) is an international pharmaceutical company with operations around the globe. It focuses on three major segments – Pharmaceuticals, Vaccines, and Consumer Healthcare. The company also specializes in developing treatments for rare blood disorders, cancer, and cardiovascular diseases. On July 28, Sanofi (NASDAQ:SNY) announced a Q2 revenue of €9.96 billion, along with a non-GAAP EPS of €1.74. At the conclusion of Q2 2023, Fisher Asset Management owned roughly 13 million shares of Sanofi (NASDAQ:SNY) worth $698.4 million. It is one of Fisher’s top healthcare stock picks.
According to Insider Monkey’s second quarter database, 30 hedge funds were bullish on Sanofi (NASDAQ:SNY). This number remained unchanged from the preceding quarter. Phill Gross and Robert Atchinson’s Adage Capital Management is a notable shareholder in the company, with 1.6 million shares worth $87.8 million.
ClearBridge Investments had this to say about Sanofi (NASDAQ:SNY) in its Q3 2022 investor letter:
“Health care proved to be the most challenging sector to navigate during the quarter, as several companies were subjected to elevated risk aversion due to possible litigation implications. Two of our top five largest individual detractors for the period were in the health care sector: Sanofi (NASDAQ:SNY) and Bayer (OTCPK:BAYZF). Sanofi, a French pharmaceutical and health care company, saw its share price fall after it was named as a co-defendant in a class action lawsuit alleging that Sanofi and other sellers of the heartburn medication Zantac failed to warn of the drug’s risk of containing a possible carcinogen.”
10. UnitedHealth Group Incorporated (NYSE:UNH)
Fisher Asset Management’s Stake Value: $750,363,000
Number of Hedge Fund Holders: 111
UnitedHealth Group Incorporated (NYSE:UNH) is a healthcare and insurance company based in the United States. It offers pharmaceutical services, healthcare plans, and technological solutions through four major segments – UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx. On July 14, UnitedHealth Group Incorporated (NYSE:UNH) announced a Q2 revenue of $92.9 billion and a non-GAAP EPS of $6.14, which exceeded the market consensus by $1.94 billion and $0.16, respectively. At the end of Q2 2023, Fisher Asset Management held 1.5 million shares of UnitedHealth Group Incorporated (NYSE:UNH) worth $750.4 million, making it one of the firm’s top healthcare picks.
According to Insider Monkey’s second quarter database, a total of 111 hedge funds were bullish on UnitedHealth Group Incorporated (NYSE:UNH). In comparison, 116 hedge funds had invested in the company during the last quarter. Rajiv Jain’s GQG Partners held the largest position in the company, with 4.8 million shares worth $2.35 billion.
L1 Capital International Fund had this to say about UnitedHealth Group Incorporated (NYSE:UNH) in its second quarter 2023 investor letter:
“Close observers of the Fund will note the increased exposure to healthcare, currently 13% of the portfolio. Healthcare is generally less macro-sensitive than some other sectors. In a reversal of market sentiment compared to 2022, the healthcare sector has been under modest pressure due to what we consider to be some short-term transitory issues, while technology, particularly anything to do with AI, has become the market’s dish du jour. We have been selectively increasing our investment in a few very high-quality healthcare businesses at prices we consider to be fair. UnitedHealth Group Incorporated (NYSE:UNH) is now a top 10 holding, and our investment thesis is outlined in this report.
We have previously written on our exposure to taxes through our investment in Intuit and its market leading TurboTax franchise (Intuit also owns the QuickBooks small business accounting franchise, Credit Karma and Mailchimp). UnitedHealth Group (UnitedHealth) is leading the charge to postpone the inevitable, while lowering overall healthcare system costs.
U.S. health spending has outpaced GDP growth for decades, with spending on healthcare increasing from around 12% of GDP in the 1980s to nearly 20% today, driven by advancements in healthcare capabilities and an aging population with increased life expectancy…” (Click here to read the full text)
9. Edwards Lifesciences Corporation (NYSE:EW)
Fisher Asset Management’s Stake Value: $756,492,000
Number of Hedge Fund Holders: 51
Edwards Lifesciences Corporation (NYSE:EW) specializes in the manufacture of medical equipment for cardiovascular treatment, remote monitoring, and critical care around the world. It also provides replacement products for minimally invasive cardiovascular procedures. On July 26, Edwards Lifesciences Corporation (NYSE:EW) announced a Q2 revenue of $1.53 billion, along with a non-GAAP EPS of $0.66, outperforming Street estimates by $20 million and $0.01, respectively. Fisher Asset Management held over 8 million shares of Edwards Lifesciences Corporation (NYSE:EW) worth $756.5 million in Q2 2023, making it one of the firm’s top healthcare plays.
According to Insider Monkey’s second quarter database, 51 hedge funds were bullish on Edwards Lifesciences Corporation (NYSE:EW), as opposed to 47 hedge funds in the past quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP held a significant stake in the company, with 4.6 million shares worth $430.5 million.
Baron Funds had this to say about Edwards Lifesciences Corporation (NYSE:EW) in its Q4 2022 investor letter:
“Negative stock selection in health care equipment was related to sharp declines from fiber optic sensors manufacturer Opsens Inc., intravascular lithotripsy leader ShockWave Medical, Inc., and transcatheter aortic valve replacement pioneer Edwards Lifesciences Corporation (NYSE:EW) These companies were the top detractors from absolute performance, and we have detailed the reasons for recent share price weakness below.
Edwards Lifesciences Corp. is the leading provider of valves for patients with heart disease. Shares fell after the company’s transcatheter aortic valve replacement (TAVR) business missed Street expectations again. Management attributed the sales shortfall to disruption from hospital staffing shortages, an issue that has an outsized impact on TAVR procedures because they are resource-intensive and require multiple specialists. We reduced the position due to increased uncertainty around the growth outlook.”
8. Danaher Corporation (NYSE:DHR)
Fisher Asset Management’s Stake Value: $983,545,000
Number of Hedge Fund Holders: 89
Danaher Corporation (NYSE:DHR) is involved in the research, manufacture, design, and innovation of medical, commercial, and industrial products internationally. The company’s Biotech segment focuses on developing technologies for biological processes, lab installations, and protein filtration systems. On July 25, Danaher Corporation (NYSE:DHR) announced a Q2 revenue of $7.16 billion and a non-GAAP EPS of $2.05, surpassing the market consensus by $40 million and $0.03, respectively. At the end of Q2 2023, Fisher Asset Management held a $983.6 million position in Danaher Corporation (NYSE:DHR), making it one of the firm’s preferred healthcare stock picks.
According to Insider Monkey’s second quarter database, 89 hedge funds were bullish on Danaher Corporation (NYSE:DHR). In comparison, 90 hedge funds had invested in the company during the last quarter. Andreas Halvorsen’s Viking Global is the largest shareholder in the company, with 4.3 million shares worth $1.02 billion.
Third Point Management had this to say about Danaher Corporation (NYSE:DHR) in its second quarter 2023 investor letter:
“Danaher Corporation (NYSE:DHR) is our longest held investment and remains a top five position. Danaher has underperformed the S&P 500 this year due to a slowdown in the bioprocessing industry and more cautious spending by biopharma customers. Bioprocessing is a key end-market that drives more than a quarter of Danaher’s profits. Bioprocessing products are the main inputs that biopharma companies use to manufacture biologic drugs, which are the fastest growing category of drugs, growing low-to-mid-teens and representing a sizable portion of the clinical pipeline.
The bioprocessing industry experienced significant growth in 2021 and 2022, driven by Covid vaccines and a strong biotech funding environment. Several participants, including Danaher, lowered their 2023 growth outlook in large part due to customer inventory destocking and biotech funding weakness. We anticipate that this slowdown is temporary, and the bioprocessing industry will return to normalized growth of high-single digit to mid-teens in 2024 and beyond.…” (Click here to read the full text)
7. Abbott Laboratories (NYSE:ABT)
Fisher Asset Management’s Stake Value: $1,054,115,000
Number of Hedge Fund Holders: 62
Abbott Laboratories (NYSE:ABT) is one of the leading pharmaceutical companies in the world. It is engaged in four segments – Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices. On July 20, Abbott Laboratories (NYSE:ABT) reported a Q2 revenue of $10 billion, along with a non-GAAP EPS of $1.08, surpassing Wall Street estimates by $280 million and $0.03, respectively. At the end of Q2 2023, Fisher Asset Management held 9.6 million shares of Abbott Laboratories (NYSE:ABT) worth $1.05 billion.
According to Insider Monkey’s second quarter database, 62 hedge funds were bullish on Abbott Laboratories (NYSE:ABT), as opposed to 70 funds in the last quarter. Ric Dillon’s Diamond Hill Capital held a notable position in the company, with 5.1 million shares worth $553.4 million.
Polen Global Growth Strategy said this about Abbott Laboratories (NYSE:ABT) in its Q1 2023 investor letter:
“As stated below in the portfolio activity section, Abbott Laboratories (NYSE:ABT) is expected to see roughly $6 billion in COVID test sales evaporate this year, creating a headwind for margins and underlying earnings per share. As long-term owners of the business, these test sales were never part of our original investment case. The core business, our primary focus, has a clear path of growing high single digits in 2023 with durable growth beyond, in our view. We believe the current price of 23x NTM P/E , while reasonable, is also misleading considering earnings this year will be artificially depressed because of the drop in COVID testing sales. On normalized earnings, the price is lower. We anticipate underlying EPS growth of at least low-teens over the next three to five years.
Lastly, we trimmed Abbott Laboratories, bringing it back to a more average position size and to also fund our increase in Thermo Fisher. Abbott is entering a year in which the company is expected to see approximately $6bn in COVID-19 test sales disappear, thus creating a headwind for margins and EPS. That said, the core business has a clear path to growing high single digits in FY23. EPS grew at a 20% CAGR from 2019-2022, far beyond our expectations when we initiated our investment. Now, we expect a more normal growth rate of low teens EPS beyond this year. Further, management’s adeptness at allocating capital continues to impress us. We expect Abbott to drive top line growth without heavily investing in R&D and SG&A this year — management effectively “front-loaded” those investments in 2021 and 2022 when COVID test sales created a bolus of cash. We believe this should allow for leverage on the operating margin going forward. Combined, Abbott and Thermo Fisher now represent 7% of the Portfolio.”
6. Johnson & Johnson (NYSE:JNJ)
Fisher Asset Management’s Stake Value: $1,103,610,000
Number of Hedge Fund Holders: 88
Johnson & Johnson (NYSE:JNJ) specializes in the manufacture of healthcare products in the consumer health segment. This includes skincare, oral-care, and baby products under multiple brands. On July 20, Johnson & Johnson (NYSE:JNJ) announced a Q2 revenue of $25.53 billion and a non-GAAP EPS of $2.80. These figures outperformed market estimates by $860 million and $0.18, respectively. At the conclusion of Q2 2023, Fisher Asset Management held a $1.10 billion stake in Johnson & Johnson (NYSE:JNJ).
According to Insider Monkey’s second quarter database, a total of 88 hedge funds were bullish on Johnson & Johnson (NYSE:JNJ). In contrast, 86 hedge funds had invested in the company during the preceding quarter. Ray Dalio’s Bridgewater Associates is a prominent investor in the company, with 3.2 million shares worth $526.6 million.
Like Merck & Co., Inc. (NYSE:MRK), Intuitive Surgical, Inc. (NASDAQ:ISRG), and Eli Lilly and Company (NYSE:LLY), Johnson & Johnson (NYSE:JNJ) is one of the top healthcare stock picks of Ken Fisher.
ClearBridge Large Cap Value Strategy had this to say about Johnson & Johnson (NYSE:JNJ) in its first quarter 2023 investor letter:
“The tech-dominated quarter was a headwind for both defensive and cyclical sectors, with shares of health care holdings such as UnitedHealth Group (UNH), Elevance (ELV) and Johnson & Johnson (NYSE:JNJ) declining after a strong 2022.”
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Disclosure: None. Ken Fisher’s Top 15 Healthcare Stock Picks is originally published on Insider Monkey.