Chronicle Journal: Finance

3 Mega-Cap Healthcare Stocks to Buy for the Rest of the Year

Healthcare has long been considered a defensive sector that provides consistent returns to investors. And with the continuing advancements in medicines and increasing demand for healthcare services, we expect fundamentally sound mega-cap healthcare stocks Pfizer (PFE), Novo Nordisk (NVO), and AbbVie (ABBV) to generate stellar returns this year and beyond. So, let’s examine these names.

The healthcare industry has long enjoyed investors’ attention because of its defensive and stable nature. But the COVID-19 pandemic has thrust the industry into the limelight. And investors’ interest in healthcare stocks is evident in the Health Care Select Sector SPDR’s (XLV) 22% returns over the past year.

The increasing use of technology in modern healthcare is expected to bolster the industry. Technological advances in telemedicine, digital health platforms, wearable devices, and genome sequencing, as examples, are expected to bring the cost of quality healthcare down. According to a Global Market Insights Inc. report, the healthcare artificial intelligence (AI) market is expected to reach $34.5 billion by 2027.

The aging population and advancements in the treatment of chronic diseases are also expected to spur the growth of the healthcare industry. So, considering all this, we think it could be wise to invest in mega-cap quality healthcare stocks Pfizer Inc. (PFE), Novo Nordisk A/S (NVO), and AbbVie Inc. (ABBV) for the rest of the year.

Click here to checkout our Healthcare Sector Report for 2021

Pfizer Inc. (PFE)

New York City-based PFE is a research-based biopharmaceutical company with a $287.38 billion market capitalization. It is engaged in discovering, developing, manufacturing, marketing, sales, and distributing of biopharmaceutical products. The company develops wellness, prevention, treatments, and cures across geographies.

On November 17, PFE announced its acquisition of Trillium Therapeutics, a clinical-stage immune-oncology company that develops innovative therapies for treating cancer. The acquisition provides PFE with biologics designed to enhance a patient’s innate immune system to detect and destroy cancer cells.

PFE’s revenues for its fiscal third quarter, ended September 30, 2021, increased 134% year-over-year to $24.10 billion. The company’s adjusted net income increased 133% year-over-year to $7.68 billion, while its adjusted EPS increased 129% year-over-year to $1.34.

Analysts expect PFE’s EPS and revenue for its fiscal year 2022 to increase 8.2% and 1.9%, respectively, year-over-year to $40.87 and $745.82 billion. Over the past nine months, the stock has gained 49.4% in price to close yesterday’s trading session at $51.20.

PFE’s POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

It has an A grade for Growth, and a B grade for Value and Quality. In the 198-stock Medical – Pharmaceuticals industry, it is ranked #10. Click here to check additional ratings of PFE for Momentum, Stability, and Sentiment.

Novo Nordisk A/S (NVO)

With a market capitalization of $255.96 billion, Bagsvaerd, Denmark-based NVO is a global healthcare company that is engaged in diabetes care. It is the world’s biggest producer of diabetes drugs and operates in diabetes and obesity care and biopharmaceutical segments. Also, it is engaged in the discovery, development, manufacturing, and marketing of pharmaceutical products.

NVO announced on November 18, 2021, that it had agreed to acquire Dicerna Pharmaceuticals, Inc. (DRNA), a specialist in therapeutics that counteract disease-causing genes. The acquisition is expected to help NVO expand its reach into RNA interference technology or RNAi, which involves the suppression of the genes, which contribute to disease.

For the fiscal third quarter, ended September 30, 2021, NVO’s net sales increased 15.1% year-over-year to Kr.35.62 billion ($5.39 billion). The company’s operating profit increased 19% year-over-year to Kr.15.25 billion ($2.30 billion), while its net profit increased 17.7% year-over-year to Kr.12.12 billion ($1.83 billion).

NVO’s EPS for its fiscal year 2021 is expected to increase 9.1% year-over-year to $3.12, and its revenue for the fourth quarter, ending December 31, 2021, is expected to increase 9.9% year-over-year to $5.61 billion. It surpassed consensus EPS estimates in each of the trailing four quarters. The stock has gained 64.5% in price over the past year to close yesterday’s trading session at $111.23.

NVO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which translates to a Strong Buy in our proprietary rating system.

It has an A grade for Quality, and a B grade for Value and Stability. It is ranked #6 in the Medical – Pharmaceuticals industry. To check the additional ratings of NVO (Growth, Momentum, and Sentiment), click here.

AbbVie Inc. (ABBV)

Biopharmaceutical company ABBV, in North Chicago, Ill., researches, develops, manufactures, commercializes, and sells medicines and therapies. The company is present in various therapeutic categories, including immunology, oncology, aesthetic, neuroscience, and women's health products. It has a $204.455 billion market capitalization.

On September 28, ABBV announced that the U.S. Food and Drug Administration had approved QULIPTA for the preventive treatment of episodic migraine in adults. It is the first, and only, oral calcitonin gene-related peptide receptor antagonist developed explicitly for the prophylactic treatment of migraine. This is expected to increase its sales worldwide due to its high efficacy, safety, and tolerability.

ABBV’s adjusted net revenues for its fiscal third quarter, ended September 30, 2021, increased 11.3% year-over-year to $14.34 billion. The company’s net earnings increased 37.7% year-over-year to $3.18 billion, while its adjusted EPS came in at $3.33, representing a 17.6% year-over-year rise.

Analysts expect ABBV’s EPS and revenue to increase 20.1% and 22.9%, respectively, year-over-year to $12.68 and $56.26 billion for fiscal 2021. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 14.7% in price to close yesterday’s trading session at $115.65.

ABBV’s POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system.

It has a B grade for Growth, Value, Sentiment, and Quality. It is ranked #7 in the Medical – Pharmaceuticals  industry. Click here to see the additional ratings of ABBV for Momentum and Stability.

Click here to checkout our Healthcare Sector Report for 2021


PFE shares were trading at $51.32 per share on Tuesday morning, up $0.12 (+0.23%). Year-to-date, PFE has gained 44.87%, versus a 25.96% rise in the benchmark S&P 500 index during the same period.



About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

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