From novel pharmaceuticals to telemedicine, most healthcare companies are on a mission to drive better patient outcomes. Shareholders who bet on the industry have been rewarded lately as healthcare stocks have returned 27.5% over the past six months, topping the S&P 500 by 16.2 percentage points.
Although these businesses have produced results, only a handful will thrive over the long term as the influx of venture capital has ushered in a new wave of competition. With that said, here is one healthcare stock boasting a durable advantage and two that may face trouble.
Two Healthcare Stocks to Sell:
Solventum (SOLV)
Market Cap: $14.95 billion
Founded in 1985, Solventum (NYSE: SOLV) develops, manufactures, and commercializes a portfolio of healthcare products and services addressing critical customer and therapeutic patient needs.
Why Are We Cautious About SOLV?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 18.2 percentage points
At $87.33 per share, Solventum trades at 12.9x forward P/E. If you’re considering SOLV for your portfolio, see our FREE research report to learn more.
Inspire Medical Systems (INSP)
Market Cap: $1.78 billion
Offering an alternative for the millions who struggle with traditional CPAP machines, Inspire Medical Systems (NYSE: INSP) develops and sells an implantable neurostimulation device that treats obstructive sleep apnea by stimulating nerves to keep airways open during sleep.
Why Are We Hesitant About INSP?
- Smaller revenue base of $898.7 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Forecasted revenue decline of 3.5% for the upcoming 12 months implies demand will fall off a cliff
Inspire Medical Systems is trading at $61.75 per share, or 42.3x forward P/E. To fully understand why you should be careful with INSP, check out our full research report (it’s free).
One Healthcare Stock to Watch:
BrightSpring Health Services (BTSG)
Market Cap: $12.36 billion
Founded in 1974, BrightSpring Health Services (NASDAQ: BTSG) offers home health care, hospice, neuro-rehabilitation, and pharmacy services.
Why Does BTSG Stand Out?
- Impressive 23.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Economies of scale give it some operating leverage when demand rises
- Forecasted revenue growth of 14.1% for the next 12 months indicates its momentum over the last two years is sustainable
BrightSpring Health Services’s stock price of $59.15 implies a valuation ratio of 29.4x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
