With an increased emphasis on health and wellness and an aging population, seniors actively seek products that contribute to their overall well-being. Given this backdrop, it could be wise to consider fundamentally strong healthcare stocks, such as Danaher Corporation (DHR), Amgen Inc. (AMGN), and DexCom, Inc. (DXCM).
The World Health Organization (WHO) reports that the percentage of people worldwide aged over 60 is expected to nearly double from 12% in 2015 to 22% by 2050. This demographic shift might lend support to an increase in demand for healthcare services.
With the global population aging, chronic health conditions are increasingly prevalent among the elderly, necessitating specialized care and support services tailored to their unique requirements. The global home healthcare is projected to grow at a CAGR of 8% from 2024 to 2030.
Given these favorable industry trends, let’s look at the fundamentals of the three healthcare stocks that stand to benefit from an aging population.
Danaher Corporation (DHR)
DHR designs, manufactures, and markets professional, medical, industrial, and commercial products and services worldwide.
DHR’s trailing-12-month gross profit margin of 58.89% is 3% higher than the industry average of 56.99%. Further, the stock’s trailing-12-month EBIT margin of 21.91% is significantly higher than the industry average of 1.42%. Also, DHR’s trailing-12-month EBITDA margin of 31.25% is 442.3% higher than the industry average of 5.76%.
For the first quarter that ended March 31, 2024, DHR’s sales were reported at $5.80 billion. The company’s gross profit and operating profit stood at $3.49 billion and $3.66 billion, respectively. Its net earnings attributable to common shareholders came in at $1.09 billion. Furthermore, the company’s adjusted net earnings per common share from continuing operations stood at $1.92.
Analysts expect DHR’s revenue for the fourth quarter (ending December 2024) to increase 4.5% year-over-year to $6.69 billion. The company’s EPS is expected to grow 16% year-over-year to $1.46 for the same period. Furthermore, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
DHR’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has an A grade for Sentiment and a B for Quality and Stability. DHR is ranked #9 among 44 stocks in the Medical - Diagnostics/Research industry.
Click here to access additional DHR ratings (Momentum, Growth, and Value).
Amgen Inc. (AMGN)
AMGN discovers, develops, manufactures, and delivers human therapeutics worldwide. It focuses on inflammation, oncology/haematology, bone health, cardiovascular disease, nephrology, and neuroscience areas. Its product portfolio includes Enbrel, Neulasta, Prolia, and Xgeva.
On June 14, 2024, AMGN announced that the U.S. Food and Drug Administration (FDA) approved BLINCYTO to treat adult and pediatric patients one month or older with CD19-positive Philadelphia chromosome-negative B-cell precursor acute lymphoblastic leukemia in the consolidation phase, regardless of measurable residual disease status.
On May 16, 2024, AMGN announced that the FDA approved IMDELLTRA to treat adults with extensive-stage small cell lung cancer who have progressed after platinum-based chemotherapy. This approval represents a significant advancement for patients with this aggressive disease.
AMGN’s trailing-12-month gross profit margin of 66.49% is 16.7% higher than the industry average of 56.99%. Likewise, its trailing-12-month EBIT margin and levered FCF margin of 24% and 12.71% are considerably higher than the industry averages of 1.42% and 1.29%, respectively.
During the fiscal first quarter that ended March 31, 2024, AMGN’s total revenues and non-GAAP operating income increased 22% and 9.1% year-over-year to $7.45 billion and $3.08 billion, respectively. Its free cash flow stood at $459 million. Moreover, its non-GAAP net income amounted to $2.14 billion. Also, its non-GAAP earnings per share came in at $3.96.
Analysts expect AMGN’s revenue for the quarter ending June 30, 2024, to increase 19.1% year-over-year to $8.32 billion. Its EPS for the quarter ending September 30, 2024, is expected to grow 3.8% year-over-year to $5.15. The company surpassed Street EPS estimates in each of the trailing four quarters, which is impressive.
Shares of AMGN have surged 33.2% over the past year to close the last trading session at $305.99.
AMGN’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
AMGN has a B grade for Quality. It is ranked #23 out of 349 stocks in the Biotech industry.
In addition to the POWR Ratings we’ve stated above, we also have AMGN ratings for Momentum, Growth, Stability, Sentiment, and Value. Get all AMGN ratings here.
DexCom, Inc. (DXCM)
DXCM is a medical device company that focuses on the design, development, and commercialization of Continuous Glucose Monitoring (CGM) systems internationally.
On June 4, 2024, DXCM announced a significant advancement in access to its products for those treating Type 2 diabetes (T2D) with basal insulin injections. The company secured access to its Dexcom ONE sensor for around 100,000 T2D users in France.
The reimbursement guidance offers people over two years on non-intensified insulin therapy (less than three injections a day) and whose glycaemic control is insufficient access to DXCM’s life-changing technology.
On May 20, DXCM introduced Dexcom ONE+, a CGM device that facilitates real-time glucose monitoring for better diabetes management. Alongside, they released the Dexcom State of Type 2 Report, a groundbreaking study exploring the current Type 2 diabetes landscape, including the preferences and behaviors of patients, caregivers, and healthcare professionals.
DXCM’s trailing-12-month gross profit margin of 62.82% is 10.2% higher than the 56.99% industry average. Its 17.14% trailing-12-month EBIT margin is significantly higher than the 1.42% industry average. Likewise, the stock’s 22.32% trailing-12-month EBITDA margin is 287.4% higher than the 5.76% industry average.
During the first quarter that ended March 31, 2024, DCXM’s revenue increased 24.2% year-over-year to $561.90 million, and its non-GAAP gross profit was $569.10 billion, up 21.1% from the prior year’s quarter. Its non-GAAP net income increased 87.2% year-over-year to $128.20 million, and non-GAAP net income per share grew 88.2% year-over-year to $0.32.
Street expects DXCM’s revenue for the second quarter ending June 2024 to increase 18.9% year-over-year to $1.04 billion. Its EPS is expected to increase 13.7% year-over-year to $0.39 for the same quarter. In addition, the company surpassed consensus EPS and revenue estimates in each of the trailing four quarters.
DXCM’s stock has gained 22.4% over the past nine months to close the last trading session at $116.64.
DXCM’s POWR Ratings reflect its outlook. The stock has a B grade for Quality and Growth. Within the Medical - Devices & Equipment industry, DXCM is ranked #53 out of 132 stocks.
Click here to access additional ratings of DXCM for Stability, Value, Momentum, and Sentiment.
What To Do Next?
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DHR shares were trading at $257.51 per share on Wednesday afternoon, up $3.38 (+1.33%). Year-to-date, DHR has gained 11.43%, versus a 15.75% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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