The medical sector is anticipated to thrive on the backs of growing healthcare awareness, early detection of diseases, and technological advancements. Therefore, let us explore medical stocks Danaher Corporation (DHR), IQVIA Holdings Inc. (IQV), and Bio-Rad Laboratories, Inc. (BIO) now.
The healthcare sector is transforming itself to incorporate greater efficiency. Given the sector’s non-cyclical nature, as per Statista, the revenue in the healthcare market is expected to grow at a CAGR of 10.5%.
As the population ages and the prevalence of chronic disease soars, patients could increasingly require frequent monitoring, and most often for longer periods, on the backs of which the demand for diagnostic tools for monitoring could grow significantly.
Medical diagnostic technology is the fastest budding area of healthcare that can save lives, improve health, and contribute to cost-effective, sustainable healthcare.
For instance, the ability of Artificial Intelligence (AI) to analyze complex medical data and identify patterns could revolutionize the accuracy and efficiency of diagnostic processes. AI in the diagnostics market is projected to reach $6.77 billion by 2029, growing at a CAGR of 34.5%.
Furthermore, according to Technavio, the global medical diagnostics market is estimated to grow by $74.58 billion from 2022 to 2027 at a CAGR of 6.2%.
Given the industrial tailwinds, quality medical stocks DHR, IQV, and BIO could be wise portfolio additions now.
Danaher Corporation (DHR)
DHR is a designer, manufacturer, and marketer of professional, medical, industrial, and commercial products and services. The company’s segments include Life Sciences; Diagnostics; and Environmental & Applied Solutions.
On May 9, DHR announced a regular quarterly dividend of $0.27 per share of its common stock, payable to holders on July 28. Its annual dividend of $1.08 yields 0.45% on prevailing prices. The company’s dividend payouts have increased at a 13.9% CAGR over the past three years and 12% CAGR over the past five years.
DHR’s revenue has grown at 19.7% and 10.5% CAGRs over the past three and five years, respectively. Moreover, its EBIT and net income have grown at 36.8% and 28.5% CAGRs over the past three years, respectively.
The stock’s trailing-12-month EBITDA margin of 34.17% is 867.8% higher than the industry average of 3.53%. Its trailing-12-month ROCE, ROTC, and ROTA are 14.74%, 7.38%, and 8.15% compared to the industry averages of negative 42.62%, 23.10%, and 33.13%, respectively.
For the fiscal first quarter that ended March 31, 2023, DHR’s sales stood at $7.17 billion, while its gross profit came in at $4.37 billion. During the same quarter, the company’s operating profit stood at $1.79 billion.
Its net earnings attributable to common stockholders and adjusted net earnings per common share stood at $1.43 billion and $2.36, respectively, for the same quarter. Moreover, cash and cash equivalents for the same quarter increased 98.5% year-over-year to $7.38 billion.
Analysts expect DHR’s revenue and EPS for the fiscal year ending December 2023 to come in at $29.51 billion and $9.42, respectively. Moreover, DHR surpassed the consensus EPS and revenue estimates in each of the trailing four quarters, which is impressive.
The stock gained marginally intraday to close the last trading session at $238.18. Over the past month, it has gained 3.4%.
DHR’s POWR Ratings reflect a promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.
DHR also has a B grade for Stability and Quality. DHR is ranked #10 of 51 stocks in the Medical – Diagnostics/Research industry.
In addition to the ratings discussed above, additional ratings for DHR’s Growth, Value, Momentum, and Sentiment can be found here.
IQVIA Holdings Inc. (IQV)
IQV engages in the provision of advanced analytics, technology solutions, and clinical research services to the life sciences industry. It operates through three segments: Technology & Analytics Solutions; Research & Development Solutions; and Contract Sales & Medical Solutions.
On May 18, IQV announced that its wholly-owned subsidiary, IQVIA Inc., priced an offering of $1.25 billion in aggregate principal amount of senior notes, which was upsized due to strong demand and consisted of $750 million aggregate principal amount of 5.7% senior secured notes due 2028 and $500 million aggregate principal amount of 6.5% senior secured notes due 2030.
The proceeds from the notes offering would be used to repay existing borrowings under the revolving credit facility and to pay fees and expenses related to the notes offering.
IQV’s revenue has grown at 9.1% and 7.9% CAGRs over the past three and five years, respectively. Moreover, its EBIT and net income have grown at 29% and 69.9% CAGRs over the past three years, respectively.
The stock’s trailing-12-month EBITDA margin of 17.63% is 399.3% higher than the industry average of 3.53%. Its trailing-12-month ROCE, ROTC, and ROTA are 17.80%, 6.01%, and 4.10% compared to the industry averages of negative 42.62%, 23.10%, and 33.13%, respectively.
For the fiscal first quarter that ended March 31, 2023, IQV’s revenues increased 2.4% year-over-year to $3.65 billion, while its income from operations came in at $471 million. IQV’s adjusted EBITDA increased 4.8% year-over-year to $851 million.
The company’s adjusted net income and adjusted earnings per share attributable to common stockholders came in at $462 million and $2.45, respectively. Moreover, its cash and cash equivalents for the quarter grew 7.7% from the year-ago value to $1.49 billion.
Analysts expect IQV’s revenue and EPS for the fiscal third quarter ending September 2023 to come in at $3.83 billion and $2.62, up 7.6% and 5.8% year-over-year, respectively. Moreover, IQV surpassed the consensus EPS and revenue estimates in each of the trailing four quarters.
The stock gained 8.4% over the past month to close the last trading session at $214.06. Over the past three months, it has gained 13.7%.
IQV’s POWR Ratings reflect a robust outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system.
IQV has a B grade for Growth, Stability, and Sentiment. It is ranked #9 within the same industry.
Click here to see additional ratings for IQV (Value, Momentum, and Quality).
Bio-Rad Laboratories, Inc. (BIO)
BIO manufactures and distributes life science research and clinical diagnostic products in the United States, Europe, Asia, Canada, and Latin America. The company operates through Life Science and Clinical Diagnostics segments.
BIO’s revenue has grown at 6.1% and 4.7% CAGRs over the past three and five years, respectively. Moreover, its EBIT and EBITDA have grown at 15.4% and 11% CAGRs over the past three years, respectively.
The stock’s trailing-12-month EBITDA margin of 19.99% is 466.1% higher than the industry average of 3.53%. Its trailing-12-month cash from operations of $242.02 million compares to the industry average of negative $21.15 million.
For the fiscal first quarter that ended March 31, 2023, BIO’s net sales came in at $676.84 million, while its non-GAAP gross profit stood at $367.04 million. BIO’s non-GAAP net income and non-GAAP income per share came in at $99.36 million and $3.34, respectively.
The company’s adjusted EBITDA came in at $148.54 million for the same quarter. Net cash provided by operating activities increased 94.3% year-over-year to $98.12 million. Moreover, BIO’s total current assets, as of March 31, 2023, stood at $3.28 billion, compared to $3.16 billion as of December 31, 2022.
Analysts expect BIO’s revenue and EPS for the fiscal third quarter ending September 2023 to come in at $731.85 million and $3.37, up 7.5% and 29.5% year-over-year, respectively.
The stock gained marginally intraday to close the last trading session at $365.80.
It’s no surprise that BIO has an overall rating of B, which translates to Buy in the POWR Ratings system.
BIO has a B grade for Growth and Value. It is ranked #8 within the same industry. To see BIO’s additional ratings for Momentum, Stability, Sentiment, and Quality, click here.
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DHR shares were trading at $237.74 per share on Monday morning, down $0.44 (-0.18%). Year-to-date, DHR has declined -10.33%, versus a 14.06% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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