With the expected surge in the healthcare sector, there are lot of companies that are expected to perform in tandem with the sector uptrend. However, such companies have to be researched on the basis of their stock valuations, business intelligence reports, latest market reports as regards their acquisitions, partnerships and all such activities that could drive the performance and revenues of the company to a higher level. Moreover, one should also scrutinize the products in their pipeline, their existing range of products or services, and the possibilities of patent cliffs, if any. Healthcare as a sector is relatively safe for investment, as it is less sensitive to the economical upswings than some other highly volatile sectors. Following are certain stocks within the healthcare sector, which could be expected to grow in tandem with the uptrend in the healthcare sector, and which should be purchased at their current market price with a medium to long term perspective.
Intuitive Surgical (ISRG, Financial) manufactures surgical instruments used for surgeries pertaining to gynecologic, urologic, neck, head and other similar types. The stock is currently trading at around $508, within its 52-week trading range of $516 and $315. With earnings per share of approximately $12.32, and price earnings of around $41, the company has a market capitalization of around $20 billion. The company has negligible competition in the arena of surgical robot, so as to enable the company to keep good margins. The company participates in buying back its own shares, which aids the company in maintaining liquidity in cash balance as well as helping its investors to liquidate their stocks. The company has a strong balance sheet. The company's 'da Vinci prostatectomy' technology is been extensively used for procedures involving hysterectomy, and is rightfully recognized as the company's primary growth driver. Moreover, the company maintains a sufficient cash balance to cover it during any unexpected volatility. I would recommend purchasing the company's stock at its current market rate, with a long term perspective.
HCA Holdings (HCA, Financial) provides outpatient facilities through its hospital network across the U.S. The stock is currently trading at around $26, within its 52-week trading range of $35 and $17. With earnings per share of around $1 and price earnings of approximately $25, the company's market capitalization is poised at around $11. The expected growth in its earnings is approximately 10% per annum. I estimate a target price of around $32 in 12-month time period, if earning per share estimate in 2012 increases to around $4, coupled with price earnings estimate of around $7. The company's price earnings to growth ratio is $0.59. In my opinion, the stock looks undervalued at its current price level and therefore can be purchased at its current levels, with a medium term perspective.
Smith & Nephew (SNN, Financial)is engaged with manufacturing of medical devices, catering to management of wounds. The stock is currently trading at around $50, within its 52-week range of 60.35 and 42.07. Having earnings per share of around $3, and price earnings of around $15, the company has a market capitalization of approximately $9 billion. The company has a healthy dividend yield of around 2.07%. Majority of company's top line projects have successfully outperformed their respective markets. The company's trailing twelve month gross margin and operating margin depict around 80.38% and 21.89%, as compared to the industry gross and operating margin of 65.61% and 21.18% respectively. In order to launch new products in the market, the company invests significantly in its research and development. 'Verilast Knee' is a promising product from the company, which can impact the company's revenue growth to a great extent. The company is implementing certain strategic initiatives such as getting into partnerships, so as to effectuate long term growth. I would recommend purchasing the company's stock, with a medium to long term perspective.
Watson Pharmaceuticals (WPI, Financial) is a well known global pharmaceutical brand catering to issues like women's health and urology. The company is involved in the manufacturing, marketing, as well as the distribution of its pharmaceutical products across the globe. The company is currently trading at around $61, within its 52-week range of $73 and $54, with earnings per share of around $2, and price earnings of $29 approximately. In 2011, the stock has gained approximately by 15.56%. The strategic outlook of the company appears to be strengthened due to its acquisition with Arrow Group. The company is expected to experience a boost in its performance as well as its generation of revenue, primarily through the authorized generic medications such as 'Concerta' and 'Lipitor.' In my opinion, Watson Pharmaceuticals can be bought at its current levels, with a long term perspective.
Valeant Pharmaceuticals International (VRX, Financial) is a global company engaged in specialty pharmaceuticals. The stock is currently trading at around $48, within its 52-week range of $57.24 and $32. The market capitalization of the company is around $14 billion, with an earnings per share of approximately $0.37, and price earnings of around $118. The company flaunts an quarterly and five-year growth rate, which is one of the best in the sector it performs. Likewise, the company has an quarterly growth rate of around 188%, while its five year growth rate is seen to be around 15%. The company's price target by 2013 should be around $70, wherein it should come within the range of the top 15 pharmaceutical companies functioning on the global platform. Valeant Pharmaceuticals has an array of well diversified products in its portfolio, due to which it does not require any single product to be the basis of the company’s revenue generator. In my opinion, Valeant Pharmaceuticals could be purchased at its current market price, with a long term perspective.
Intuitive Surgical (ISRG, Financial) manufactures surgical instruments used for surgeries pertaining to gynecologic, urologic, neck, head and other similar types. The stock is currently trading at around $508, within its 52-week trading range of $516 and $315. With earnings per share of approximately $12.32, and price earnings of around $41, the company has a market capitalization of around $20 billion. The company has negligible competition in the arena of surgical robot, so as to enable the company to keep good margins. The company participates in buying back its own shares, which aids the company in maintaining liquidity in cash balance as well as helping its investors to liquidate their stocks. The company has a strong balance sheet. The company's 'da Vinci prostatectomy' technology is been extensively used for procedures involving hysterectomy, and is rightfully recognized as the company's primary growth driver. Moreover, the company maintains a sufficient cash balance to cover it during any unexpected volatility. I would recommend purchasing the company's stock at its current market rate, with a long term perspective.
HCA Holdings (HCA, Financial) provides outpatient facilities through its hospital network across the U.S. The stock is currently trading at around $26, within its 52-week trading range of $35 and $17. With earnings per share of around $1 and price earnings of approximately $25, the company's market capitalization is poised at around $11. The expected growth in its earnings is approximately 10% per annum. I estimate a target price of around $32 in 12-month time period, if earning per share estimate in 2012 increases to around $4, coupled with price earnings estimate of around $7. The company's price earnings to growth ratio is $0.59. In my opinion, the stock looks undervalued at its current price level and therefore can be purchased at its current levels, with a medium term perspective.
Smith & Nephew (SNN, Financial)is engaged with manufacturing of medical devices, catering to management of wounds. The stock is currently trading at around $50, within its 52-week range of 60.35 and 42.07. Having earnings per share of around $3, and price earnings of around $15, the company has a market capitalization of approximately $9 billion. The company has a healthy dividend yield of around 2.07%. Majority of company's top line projects have successfully outperformed their respective markets. The company's trailing twelve month gross margin and operating margin depict around 80.38% and 21.89%, as compared to the industry gross and operating margin of 65.61% and 21.18% respectively. In order to launch new products in the market, the company invests significantly in its research and development. 'Verilast Knee' is a promising product from the company, which can impact the company's revenue growth to a great extent. The company is implementing certain strategic initiatives such as getting into partnerships, so as to effectuate long term growth. I would recommend purchasing the company's stock, with a medium to long term perspective.
Watson Pharmaceuticals (WPI, Financial) is a well known global pharmaceutical brand catering to issues like women's health and urology. The company is involved in the manufacturing, marketing, as well as the distribution of its pharmaceutical products across the globe. The company is currently trading at around $61, within its 52-week range of $73 and $54, with earnings per share of around $2, and price earnings of $29 approximately. In 2011, the stock has gained approximately by 15.56%. The strategic outlook of the company appears to be strengthened due to its acquisition with Arrow Group. The company is expected to experience a boost in its performance as well as its generation of revenue, primarily through the authorized generic medications such as 'Concerta' and 'Lipitor.' In my opinion, Watson Pharmaceuticals can be bought at its current levels, with a long term perspective.
Valeant Pharmaceuticals International (VRX, Financial) is a global company engaged in specialty pharmaceuticals. The stock is currently trading at around $48, within its 52-week range of $57.24 and $32. The market capitalization of the company is around $14 billion, with an earnings per share of approximately $0.37, and price earnings of around $118. The company flaunts an quarterly and five-year growth rate, which is one of the best in the sector it performs. Likewise, the company has an quarterly growth rate of around 188%, while its five year growth rate is seen to be around 15%. The company's price target by 2013 should be around $70, wherein it should come within the range of the top 15 pharmaceutical companies functioning on the global platform. Valeant Pharmaceuticals has an array of well diversified products in its portfolio, due to which it does not require any single product to be the basis of the company’s revenue generator. In my opinion, Valeant Pharmaceuticals could be purchased at its current market price, with a long term perspective.
