In this article, we will be taking a look at the 10 best diabetes stocks to buy now.
Diabetes remains one of the biggest challenges to mankind. According to the World Health Organization, 1.5 million deaths were directly caused by diabetes in 2019. Over the years, the biggest healthcare companies in the world have developed new medical technologies that help diabetes patients have a better quality of life from needle-free continuous glucose monitoring systems (CGM) to more convenient insulin therapies and drugs that prevent complications of chronic illness. Among the biggest diabetes care stocks that caught the attention of investors in 2021 are Abbott Laboratories (NYSE:ABT), Tandem Diabetes Care, Inc. (NASDAQ:TNDM), Medtronic plc (NYSE:MDT), and Johnson & Johnson (NYSE:JNJ).
According to a Mordor Intelligence market report, the global diabetes care device industry was valued at $49 billion in 2020 and is projected to reach $69 billion by 2026 at a CAGR of 5.75%.
Diabetes remains one of the fastest-growing chronic diseases in the world. As of 2018, 11% of the US population, or 34.2 million Americans, had diabetes, according to the National Diabetes Statistics Report 2020 by the Centers for Disease Control and Prevention (CDC).
Our Methodology
In our list of the best diabetes stocks to buy, we analyzed the biggest publicly traded diabetes companies that produce pharmaceuticals, insulin pumps, and other medical devices such as continuous glucose monitoring systems.
These are some of the most popular diabetes stocks among the 873 hedge funds tracked by Insider Monkey. We ranked the list based on the number of hedge funds having stakes in each firm as of the second quarter.
We included only those diabetes stocks that have positive analyst ratings and long-term growth catalysts.
Without further ado, let’s take a look at the 10 best diabetes stocks to buy now.
Image by LuAnn Hunt from Pixabay
Best Diabetes Stocks To Buy Now
10. Novo Nordisk A/S (NYSE:NVO)
Number of Hedge Fund Holders: 20
We start our list of the 10 best diabetes stocks to buy now with Novo Nordisk A/S (NYSE:NVO), a Danish pharmaceutical company that commercialized vital insulin production in 1923. The company developed Rybelsus, the first oral tablet to control blood sugar in adult patients with type 2 diabetes, which received FDA approval in 2019.
Aside from the company’s dominance in the global diabetes market, Novo Nordisk A/S (NYSE:NVO) is a stable investment for income investors offering a yield of 1.41%.
SEB Equities analyst Carsten Lonborg upgraded Novo Nordisk A/S (NYSE:NVO) to Buy from Hold on October 18, with a price target of DKK 725.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Novo Nordisk A/S (NYSE:NVO) with 24.2 million shares worth more than $2.03 billion.
9. Novartis AG (NYSE:NVS)
Number of Hedge Fund Holders: 22
The FDA accepted Novartis AG’s (NYSE:NVS) supplemental Biologics License Application (sBLA) for its diabetic macular edema oral drug Beovu on October 14, wherein regulatory decisions are expected in mid-2022 in Europe and US. Novartis AG (NYSE:NVS) is popular among investors and market analysts as the healthcare stock possesses solid fundamentals.
Washington-based investment firm Fisher Asset Management is the biggest stakeholder of the company as of the second quarter, with a $909 million stake. Overall, 22 funds of the 873 elite funds tracked by Insider Monkey reported owning stakes in Novartis AG (NYSE:NVS) at the end of June 2021.
Novartis AG (NYSE:NVS) is one of the biggest healthcare companies that consistently pay dividends to its shareholders. The company offers a high dividend yield of 3.77%.
Luisa Hector of Berenberg on October 12 kept a Buy rating on Novartis AG (NYSE:NVS) with a CHF 88 price target.
8. Tandem Diabetes Care, Inc. (NASDAQ:TNDM)
Number of Hedge Fund Holders: 32
Insulin pump producer Tandem Diabetes Care, Inc. (NASDAQ:TNDM), which ranks eighth in our list of 10 best diabetes stocks to buy now, recently saw an increase in stakeholders in the June quarter with 32 elite hedge funds having a stake in the stock, up from 25 in the first quarter of 2021. Mitchell Blutt of Consonance Capital Management is one of the biggest stakeholders of Tandem Diabetes Care, Inc. (NASDAQ:TNDM) as of the end of the second quarter.
SVB Leerink analyst Danielle Antalffy raised his price target for Tandem Diabetes Care, Inc. (NASDAQ:TNDM) to $135 from $123 on September 27. The analyst kept a Market Perform rating on the California-based medical device stock.
In the second quarter of 2021, Tandem Diabetes Care, Inc. (NASDAQ:TNDM) shipped 33,817 insulin pumps globally, an increase of 81% from 18,687 pumps in Q2 2020. The company’s revenue in the second quarter grew 58% year-over-year to $172.1 million and surpassed analyst estimates by $28.8 million. The stock gained 33.2%, year to date.
7. AstraZeneca PLC (NYSE:AZN)
Number of Hedge Fund Holders: 37
AstraZeneca PLC (NASDAQ:AZN), one of the biggest vaccine producers in the world, brought in $1.17 billion in global sales from its COVID-19 vaccine in the first half of 2021. AstraZeneca PLC (NASDAQ:AZN) also reported a 65% increase in sales of the drug maker’s diabetes medicine Farxiga, which brought in $734 million in the second quarter. The drug manufacturer based in the United Kingdom reported an overall sales growth of 31% to $8.22 billion in the second quarter of 2021. The pharmaceutical company ranks seventh in our list of 10 best diabetes stocks to buy now.
As of the end of the second quarter, 37 hedge funds tracked by Insider Monkey reported owning stakes in AstraZeneca PLC (NASDAQ:AZN). The total worth of these stakes is $2.77 billion. This shows the elite hedge funds are bullish on the pharmaceutical firm as 34 funds had stakes in the company in the previous quarter, having a total worth of $2.66 billion.
On October 19, UBS analyst Michael Leuchten raised his price target for AstraZeneca PLC (NASDAQ:AZN) to 10,000 GBP from 9,200 GBP while maintaining a Buy rating.
In addition to Abbott Laboratories (NYSE:ABT), Tandem Diabetes Care, Inc. (NASDAQ:TNDM), Medtronic plc (NYSE:MDT), and Johnson & Johnson (NYSE:JNJ), AstraZeneca PLC (NASDAQ:AZN) is also a good investment for long-term gains, according to analysts.
6. Insulet Corporation (NASDAQ:PODD)
Number of Hedge Fund Holders: 38
Insulet Corporation (NASDAQ:PODD) manufactures insulin delivery systems globally and it ranks sixth on the list of 10 best diabetes stocks to buy now. In August, the FDA approved the medical device company’s Omnipod insulin management system. Shares of Insulet Corporation (NASDAQ:PODD) increased 26% in the past twelve months.
The Massachusetts-based injectable drugmaker Insulet Corporation (NASDAQ:PODD) recorded a year-over-year revenue increase of 16.3% to $263.2 million in the second quarter, driven by a high demand for its Omnipod products.
At the end of the second quarter of 2021, 38 hedge funds in the database of Insider Monkey held stakes worth $1.45 billion in Insulet Corporation (NASDAQ:PODD), compared to 39 in the preceding quarter worth $1.56 billion.
In the Q2 2021 investor letter of Baron Funds, the fund mentioned Insulet Corporation (NASDAQ:PODD) and discussed its stance on the firm. Here is what the fund said:
“We added to our position in Insulet Corp., which sells the OmniPod insulin pump for people with diabetes who require insulin. We think the OmniPod pump has advantages over durable pumps, including a better form factor without tubing, easier patient access through the pharmacy channel (vs. the DME channel), a superior pay-as-you-go model (no upfront cost vs. upfront 4-year contracts), and broader reimbursement in the Type 2 diabetes population. The company expects to receive FDA approval of the OmniPod 5 soon, which will be the first and only wearable, tubeless automated insulin delivery device. The wearable OmniPod 5 will communicate with the DexCom continuous glucose monitoring system, it will have an adaptive algorithm built-in, and an app will allow users to control the system from a smartphone. We think the OmniPod 5 will catalyze adoption in the large and underpenetrated global market for patients with diabetes who require insulin.”
5. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 61
Abbott Laboratories (NYSE:ABT) is a $225 billion medical device company that sells diabetes care products including blood glucose monitoring systems and diabetes management systems. In its third-quarter earnings, the Illinois-based healthcare company recorded a 33% year-over-year growth in diabetes care revenue totaling $1.12 billion. Overall, the company’s revenue in the third quarter was $10.93 billion, beating revenue estimates by $1.36 billion.
Aside from the fact that Abbott Laboratories (NYSE:ABT) has a 5-year average sales growth rate of 12.40%, investors value the company’s dividend-paying consistency. The medical device company offers a 1.42% dividend yield.
Following solid third-quarter results, Morgan Stanley analyst David Lewis maintained an Overweight rating on Abbott Laboratories (NYSE:ABT) on October 21 and increased his price target for the stock to $146 from $136.
4. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 64
Eli Lilly and Company (NYSE:LLY) is a pharmaceutical company whose products are sold in more than 120 countries. The Indiana-based drug manufacturer ranks fourth on the list of 10 best diabetes stocks to buy now. The company manufactures insulin injections for patients with type 1 or type 2 diabetes.
Additionally, Eli Lilly and Company (NYSE:LLY) recently highlighted positive clinical results from its new diabetes pipeline, Tirzepatide, on October 19. Tirzepatide is a potential type 2 diabetes medication that could produce $10 billion in sales and add to the pharmaceutical giant’s promising pipeline of new treatments, according to analysts. Eli Lilly and Company (NYSE:LLY) plans to submit the drug to regulatory authorities in the US and globally by the end of 2021.
Shares of Eli Lilly and Company (NYSE:LLY) soared 44%, year to date. On October 11, Eli Lilly and Company (NYSE:LLY) was upgraded to Buy from Hold by analyst Kerry Holford of Berenberg. According to the analyst, the drug company’s pipeline advancement has effectively sealed Eli Lilly’s long-term sales growth, sitting at 10% yearly through 2030 compared to a peer average of 4%. Holford increased his price target for the stock to $270 from $240.
Overall, 64 elite hedge funds have a positive sentiment on Eli Lilly and Company (NYSE:LLY) by the end of the second quarter of 2021, compared to 55 in the previous quarter.
Eli Lilly and Company (NYSE:LLY) is a suitable option for income investors, as the company pays an annual dividend of $3.40 per share.
In the Q2 2021 investor letter of Baron Funds, the fund mentioned Eli Lilly and Company (NYSE:LLY) and discussed its stance on the firm. Here is what the fund said:
“We started a position in Eli Lilly and Company, a large-cap pharmaceutical company. We think Lilly has a healthy base business with limited near-term patent expirations, a strong pipeline, and potential for significant margin expansion, which should translate to high single-digit revenue growth and mid-teens earnings growth over the next five years. Lilly’s pipeline includes donanemab, a potential blockbuster drug which the company is developing for Alzheimer’s disease and which recently received Breakthrough Therapy Designation by the FDA.”
3. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 68
As a dividend aristocrat that has continuously increased dividends for the past 44 years and delivered passive income to shareholders, Medtronic plc (NYSE:MDT) ranks third on our list of the 10 best diabetes stocks to buy now. The Irish medical device company offers a decent dividend yield of 2.05% and has a payout ratio of 44.15%.
Medtronic plc (NYSE:MDT) manufactures a variety of continuous monitoring glucose (CGM) systems and insulin pumps. The company’s diabetes segment revenue increased by 2% to $572 million in the first quarter of fiscal 2022, driven by continuous demand for insulin pumps globally. Overall, the medical device company’s revenue increased by 23% year on year to $8 billion in the quarter that ended in June.
The Dublin-based medical device company has recently been in active discussions to buy Israeli startup Triple Jump for $300 million, after initially investing $20 million last year. Triple Jump was founded in 2015 and is developing insulin pump therapy with smartphone connectivity. Following this announcement, Piper Sandler analyst Matt O’Brien kept a $152 price target on Medtronic plc (NYSE:MDT) with an Overweight rating on October 18.
Diamond Hill Capital is one of the biggest stakeholders of Medtronic plc (NYSE:MDT) as of the end of the second quarter, according to the data tracked by Insider Monkey. Overall, 68 funds were bullish on Medtronic plc (NYSE:MDT) by the end of the June quarter, compared to 65 in the previous quarter.
2. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 79
Merck & Co., Inc. (NYSE:MRK) is a pharmaceutical company based in New Jersey that develops and sells treatments for diabetes and other chronic diseases. The company’s pioneer anti-diabetes medication, Januvia, received its FDA approval in 2006.
In addition to Merck & Co., Inc.’s (NYSE:MRK) expanding line of medications, the FDA approved Steglatro, a type 2 diabetes medication co-developed with Pfizer Inc. (NYSE:PFE), in 2017.
On November 1, Argus analyst David Toung upgraded Merck & Co., Inc. (NYSE:MRK) to Buy from Hold with a price target of $110.
Of the 873 elite funds tracked by Insider Monkey, 79 were long Merck & Co., Inc. (NYSE:MRK) at the end of June. Washington-based investment firm Fisher Asset Management is the leading stakeholder of the company with 10.3 million shares worth $802 million.
1. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 88
Big pharma Johnson & Johnson (NYSE:JNJ) tops the list of 10 best diabetes stocks to buy now. The New Jersey-based healthcare firm markets Invokana, an FDA-approved type 2 diabetic medication that decreases blood sugar in adults while also lowering the risk of stroke and heart attack.
Johnson & Johnson (NYSE:JNJ) also manufactures consumer health products, medical devices, and other prescription medications to treat cancer, hypertension, psoriasis, and chronic brain disorders such as schizophrenia. Johnson & Johnson (NYSE:JNJ) is also one of the biggest vaccine makers in the world. On October 20, the FDA approved the drugmaker’s single booster shot for people aged 18 and up.
The drug manufacturer saw a 10.7% year-over-year total sales growth to $23.3 billion in the third quarter of 2021. Shares of Johnson & Johnson (NYSE:JNJ) climbed 13% in the past twelve months.
Jayson Bedford of Raymond James maintained an Outperform rating on Johnson & Johnson (NYSE:JNJ) and set a price target of $178 per share.
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Disclosure. None. 10 Best Diabetes Stocks To Buy Now is originally published on Insider Monkey.
