Healthcare, one of the largest and most complex sectors, is composed of a broad range of companies that sell medical products and services. The healthcare sector includes companies that sell drugs, medical devices, and insurance, as well as hospitals and healthcare providers. Some of the largest healthcare companies in the world include UnitedHealth Group Inc. (UNH), Pfizer Inc. (PFE), and Abbvie Inc. (ABBV).
The healthcare sector has caught investors’ attention since some of these companies have received regulatory approval for drugs to treat COVID-19 and begun distributing vaccines, and others are rushing to develop and win approval for new COVID-19 drugs. There are also companies involved in various other ways with combating the pandemic, such as supplying products to test for and manage treatments of the virus.
Despite this surge in demand for COVID-19 treatments, healthcare stocks have underperformed the broader market. In this story, the sector is represented by the Health Care Select Sector SPDR ETF (XLV), an exchange-traded fund (ETF). XLV’s total return was 23.6% over the past 12 months, below the Russell 1000’s total return of 30.4%, as of Nov. 24, 2021. The statistics in the tables below are also as of Nov. 24, 2021.
Here are the top three healthcare stocks with the best value, fastest growth, and most momentum.
These are the healthcare stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.
|Best Value Healthcare Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Sage Therapeutics Inc. (SAGE)||39.74||2.3||3.2|
|Bio-Rad Laboratories Inc. (BIO)||741.16||22.2||3.4|
|Organon & Co. (OGN)||31.20||7.9||5.2|
- Sage Therapeutics Inc.: Sage Therapeutics creates treatments for central nervous system disorders, including schizophrenia and major depressive disorder. For Q3 2021 ended Sept. 30, Sage Therapeutics reported widening net losses year-over-year (YOY) as net product revenue slipped by 12.1% over the same period. However, the company reported progress in its development of zuranolone, a potential treatment for major depressive disorder and postpartum depression.
- Bio-Rad Laboratories Inc.: Bio-Rad Laboratories makes products and systems used to separate chemical and biological materials, as well as to analyze, purify, and identify components. The company's products are utilized in life science research and in the chemistry and healthcare fields.
- Organon & Co.: Organon is a pharmaceutical company. It develops and produces medicines for reproductive health, dermatology, heart disease, allergies, and other areas. On Nov. 11, Organon announced that it would acquire Forendo Pharma, a clinical-stage drug development company focused on novel treatments in women's health. Forendo has a potential treatment in early development for endometriosis, a common condition impacting women of reproductive age. The total consideration for the acquisition is up to roughly $954 million, including payments based on achieving specific development and regulatory milestones.
These are the top healthcare stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
|Fastest Growing Healthcare Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Pfizer Inc. (PFE)||51.08||286.7||446.2||134.4|
|The Cooper Companies Inc. (COO)||398.44||19.6||1,000||32.0|
|Royalty Pharma PLC (RPRX)||41.85||17.9||1,100||8.6|
- Pfizer Inc.: Pfizer is a global biopharmaceutical company. It discovers, develops, makes, and sells a variety of biopharmaceutical products including medicines and vaccines. Topline results from a Phase 3 study of its COVID-19 vaccine with BioNTech SE (BNTX) in individuals 12 to 15 years of age were announced on Nov. 22. The findings show that a two-dose series of the vaccine was 100% effective against COVID-19. On Nov. 16, the company announced that it was seeking emergency use authorization from the U.S. Food and Drug Administration (FDA) of its investigational oral antiviral candidate, PAXLOVID, for the treatment of mild to moderate COVID-19 in patients at increased risk of hospitalizations or death. If approved, PAXLOVID would be the first oral antiviral of its kind.
- The Cooper Companies Inc.: Through subsidiaries, The Cooper Companies develops, makes, and markets specialty healthcare products. The company provides contact lenses, diagnostic instruments, surgical instruments, and accessories. Cooper Companies announced on Nov. 10 that it would acquire Generate Life Sciences, a privately held leading provider of donor egg and sperm for fertility treatments, fertility cryopreservation services, and newborn stem cell storage. The acquisition is expected to enhance Cooper Companies' offerings to fertility clinics and Ob/Gyns. The deal is valued at $1.6 billion and is expected to close in the first quarter of 2022.
- Royalty Pharma PLC: Royalty Pharma is a late-stage biopharmaceutical product investment company. The company collaborates with biotechnology companies of all sizes, research hospitals, academic institutions, research hospitals to develop treatments. Its profile of pharmaceutical investments includes commercial products and development-stage candidates.
These are the healthcare stocks that had the highest total return over the last 12 months.
|Healthcare Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Moderna Inc. (MRNA)||276.38||112.1||173.6|
|Novavax Inc. (NVAX)||200.71||15.2||113.6|
|Eli Lilly and Co. (LLY)||261.96||250.6||85.5|
|Health Care Select Sector SPDR ETF (XLV)||N/A||N/A||23.6|
- Moderna Inc.: Moderna is a clinical-stage biotechnology company focused on the discovery and development of messenger ribonucleic acid (mRNA) therapeutics and vaccines. It develops mRNA medicines for infectious, immuno-oncology, and cardiovascular diseases. Moderna’s COVID-19 vaccine continues to be in high demand globally. On Nov. 19, Moderna announced that the FDA had extended the emergency use authorization of a booster dose of the Moderna COVID-19 vaccine at a specified dose level to all adults aged 18 and older that have completed a primary vaccination with any authorized or approved COVID-19 vaccine.
- Novavax Inc.: Novavax is a clinical-stage biotech company focused on the discovery, development and commercialization of vaccines to treat infectious diseases, seasonal influenza, SARS, and the Ebola virus. The company uses a proprietary recombinant technology platform. For Q3 2021 ended Sept. 30, Novavax reported widening net losses on rising revenue YOY. The revenue improvement was driven by development activities relating to NVX-CoV2373, the company's COVID-19 vaccine.
- Eli Lilly and Co.: Eli Lilly is a drug manufacturing company that develops, makes, and sells pharmaceutical products. The company's offerings include diabetes and other endocrinology products, immunology, neuroscience, and other products.
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YCharts. “Financial Data.” Accessed Nov. 26, 2021.
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Organon & Co. "Organon to Acquire Forendo Pharma." Accessed Nov. 26, 2021.
Pfizer Inc. "Follow-Up Data From Phase 3 Trial of Pfizer-BioNTech COVID-19 Vaccine Support Safety and High Efficacy in Adolescents 12 Through 15 Years of Age." Accessed Nov. 26, 2021.
Pfizer Inc. "Pfizer Seeks Emergency Use Authorization for Novel COVID-19 Oral Antiviral Candidate." Accessed Nov. 26, 2021.
The Cooper Companies Inc. "CooperCompanies to Acquire Generate Life Sciences® for $1.6 Billion." Accessed Nov. 26, 2021.
Moderna Inc. "Moderna Announces FDA Authorization of Booster Dose of COVID-19 Vaccine in the U.S. for Adults 18 Years and Older." Accessed Nov. 26, 2021.
Novavax Inc. "Novavax Reports Third Quarter 2021 Financial Results and Operational Highlights." Accessed Nov. 26, 2021.