Introducing the Top Seven Healthcare Stocks: The Elite “Magnificent Seven”

Introducing the Top Seven Healthcare Stocks: The Elite “Magnificent Seven”

The original “Magnificent Seven” are a group of technology stocks that have generally generated market-beating returns over the past decade. Creating an equally large group in another sector like healthcare is not an exact science. So, some might disagree with the list below. That said, however, the seven healthcare stocks in my “Magnificent Seven” of the sector share the following characteristics. First, they are all leaders in their respective niches.

Second, they have significantly outperformed the market over the past decade. Third, they all have strong long-term prospects. That said, here is my Magnificent Seven of healthcare stocks: Elie Lilly (NYSE:LLY), Novo Nordisk (NYSE:NVO), Vertex Pharmaceuticals (NASDAQ:VRTX), AbbVie (NYSE:ABBV), Intuitive surgical (NASDAQ:ISRG), HCA Health (NYSE:HCA)And UnitedHealth Group (NYSE:UNH).

Introducing the Top Seven Healthcare Stocks: The Elite “Magnificent Seven”

Eli Lilly and Novo Nordisk

It makes sense to group these two pharmaceutical giants. Both are leaders in the diabetes and obesity care markets, where they have competed for decades. Eli Lilly last year won approval for Zepbound, an anti-obesity treatment expected to generate billions in revenue. Novo Nordisk’s competitor in this area, Wegovy, continues to grow its sales at an incredible rate. Additionally, both drugmakers have incredibly deep pipelines.

Novo Nordisk is always looking to innovate in the obesity market. He recently reported positive results from a phase 1 study for a promising candidate. Meanwhile, Eli Lilly gained approval for several new products last year. The group is awaiting news from US regulators regarding donanemab, a potential treatment for Alzheimer’s disease. Eli Lilly also delivered promising phase 1 results for a gene therapy that could treat hearing loss.

Both companies are expected to continue to generate excellent financial results and stock market performance. Expect both of these stocks to reach billions of dollars within a decade.

Vertex Pharmaceuticals

Vertex Pharmaceuticals is riding the wave of its dominance in the market for therapies treating a rare disease called cystic fibrosis (CF). Although very innovative in this field in which it continues to progress, biotech is today seeking to diversify. Reducing your exposure to your primary therapeutic area is not a bad idea. Vertex Pharmaceuticals recently won approval for a gene-editing treatment called Casgevy.

She developed this therapy in collaboration with CRISPR therapeutics. Casgevy is a unique curative treatment for sickle cell disease and transfusion-dependent beta-thalassemia, two rare blood diseases that have been incredibly difficult to treat or manage. This step represents a major step forward for Vertex, but more is to come. The drugmaker is moving closer to launching another cystic fibrosis drug and an entirely new treatment for acute pain.

Vertex also has several key products in its pipeline. Biotech seems set to maintain its momentum for a long time.

AbbVie

AbbVie became a standalone company in January 2013 when it spun off from Abbott Laboratories. Since then, the drugmaker has dominated the market, largely thanks to its superstar immunology drug, Humira. The rheumatoid arthritis drug lost patent exclusivity last year, but AbbVie is handling what is one of the largest patent cliffs in industry history quite well (Humira is the drug best-selling of all time).

Although sales have been declining since last year, management expects that to change by 2025. AbbVie’s Skyrizi and Rinvoq are Humira’s heirs. It’s hard to find a drug duo that can replace peak annual sales of $21.2 billion, but Skyrizi and Rinvoq will surpass that total. Management expects them to achieve combined revenue of $27 billion by 2027.

This says a lot about AbbVie’s potential for innovation, particularly in immunology. The company has other promising products and candidates, and it is a dividend king. Investors, including those looking for income, can’t go wrong with this stock.

Intuitive surgical

Intuitive Surgical is the company behind the da Vinci System, a robot-assisted surgery (RAS) device. The healthcare leader has pioneered the use of RAS machines, which allow surgeons to perform minimally invasive surgical procedures. Unlike open surgeries, doctors do not need to make large incisions to access and get a complete view of the organs they are operating on. The Da Vinci system is equipped with tiny instruments with incredible maneuverability.

Intuitive Surgical had installed 8,606 of its da Vinci systems by the end of 2023. As long as demand for these machines increases and the volume of procedures performed with them increases, Intuitive Surgical’s revenue and profits are expected to continue to grow. in the right direction. Given the aging population and the fact that only 5% of surgeries that can be performed robotically are currently done, it appears that Intuitive Surgical has a long growth path.

UnitedHealth Group and HCA Healthcare

UnitedHealth Group and HCA Healthcare are two important players in the American healthcare system. The former is one of the largest health insurers in the country and offers pharmacy management solutions and data and analytics services to other insurers through its subsidiary Optum. HCA Healthcare is one of the nation’s largest hospital chains, with facilities spread across much of the United States, although it is particularly concentrated in Florida and Texas. Although both companies saw their businesses disrupted at the height of the pandemic and suffered somewhat from the economic problems that followed, their operations are resilient.

Pandemic-related issues have mostly eased. UnitedHealth Group and HCA Healthcare continue to make progress and both also stand to benefit from the aging population. UnitedHealth Group’s Optum will see demand for the services it offers increase as insurance claims increase, while occupancy rates and volume of HCA Healthcare’s medical care services will also move in the right direction. direction. In short, both stocks still have plenty of growth fuel left in their tanks.

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Thrive Junior Bakina holds positions at Intuitive Surgical and Vertex Pharmaceuticals. The Motley Fool features and recommends Abbott Laboratories, CRISPR Therapeutics, HCA Healthcare, Intuitive Surgical and Vertex Pharmaceuticals. The Motley Fool recommends Novo Nordisk and UnitedHealth Group. The Motley Fool has a disclosure policy.

Meet the “Magnificent Seven” of Healthcare Stocks was originally published by The Motley Fool

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