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12 Best Small-Cap Healthcare Stocks To Buy Now

In this article, we discuss 12 best small-cap healthcare stocks to buy now. If you want to see more stocks in this selection, check out 5 Best Small-Cap Healthcare Stocks to Buy Now

Macroeconomic headwinds and recessionary concerns will not weaken healthcare deals next year after the market experienced resilient mergers and acquisitions in 2022. As per PwC, growing transaction volumes and market players focusing on value-based care, paired with high levels of cash stockpiles and private equity “dry powder”, are resulting in ongoing expansion for deal volumes in 2023. Nick Donkar, PwC’s U.S. health services deals leader, expects a resilient outlook for health services M&A activity in 2023 with companies majorly exploring M&A, divestitures, and similar transactions. Donkar stated in an interview on December 8: 

“The deal market in 2022 was fairly robust coming off an unprecedented banner year, which was 2021. Obviously, 2021 was the highest deal volume we’ve experienced from a health services perspective. We’re happy to see the health of the overall market, no pun intended, with respect to the level of volume and activity that has been exhibited thus far in 2022.”

Nick Donkar categorized the healthcare space as almost “recession-proof“, noting that innovation, technological advancements, and high investment continues to improve patient care. Investors usually gravitate towards healthcare stocks like AbbVie Inc. (NYSE:ABBV), UnitedHealth Group Incorporated (NYSE:UNH), and Abbott Laboratories (NYSE:ABT). However, we discuss some of the top small-cap healthcare stocks in this article. 

Our Methodology

We selected the following healthcare stocks based on positive analyst coverage, strong business fundamentals, and market visibility. These firms have a market cap of between $300 million to $2 billion as of December 12. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. 

Best Small-Cap Healthcare Stocks to Buy Now

12. Addus HomeCare Corporation (NASDAQ:ADUS)

Number of Hedge Fund Holders: 10

Market Capitalization as of December 12: $1.662 Billion 

Addus HomeCare Corporation (NASDAQ:ADUS) is a Texas-based company that provides personal care services to the elderly, chronically ill, disabled persons, and individuals at risk of hospitalization in the United States. It operates through three segments – Personal Care, Hospice, and Home Health. It is one of the best healthcare stocks to consider. 

RBC Capital analyst Frank Morgan on November 2 raised the price target on Addus HomeCare Corporation (NASDAQ:ADUS) to $121 from $110 and maintained an Outperform rating on the shares. The company’s Q3 results were “solid” as organic Personal Care segment volume growth of 7% outperformed management’s expectations, the analyst told investors in a research note. He added that he is also encouraged by signs of a feasible hospice backdrop in October, as well as Addus HomeCare Corporation (NASDAQ:ADUS)’s improved hiring.

According to Insider Monkey’s data, 10 hedge funds were bullish on Addus HomeCare Corporation (NASDAQ:ADUS) at the end of September 2022, compared to 13 funds in the prior quarter. The collective stakes held by elite funds in Q3 2022 increased to $45 million from $44 million in Q2 2022. Brian Ashford-Russell and Tim Woolley’s Polar Capital held the largest position in the company, comprising 346,297 shares worth $33 million. 

Like AbbVie Inc. (NYSE:ABBV), UnitedHealth Group Incorporated (NYSE:UNH), and Abbott Laboratories (NYSE:ABT), Addus HomeCare Corporation (NASDAQ:ADUS) is one of the best healthcare stocks to invest in. 

11. PROCEPT BioRobotics Corporation (NASDAQ:PRCT)

Number of Hedge Fund Holders: 11

Market Capitalization as of December 12: $1.914 Billion

PROCEPT BioRobotics Corporation (NASDAQ:PRCT) is a California-based surgical robotics company that manufactures transformative solutions in urology. It develops and sells AquaBeam Robotic System, an image-guided, surgical robotic system for minimally-invasive urologic surgery focused on treating benign prostatic hyperplasia. On November 3, PROCEPT BioRobotics Corporation (NASDAQ:PRCT) posted a Q3 revenue of $20.35 million, up 134.7% year-over-year, beating Wall Street estimates by $3.12 million. The company increased fiscal year 2022 total revenue guidance to approximately $72.5 million, representing growth of 110% compared to 2021, versus a consensus of $67.51 million.

On November 14, Truist analyst Richard Newitter raised the price target on PROCEPT BioRobotics Corporation (NASDAQ:PRCT) to $58 from $56 and maintained a Buy rating on the shares. The analyst’s meeting with PROCEPT BioRobotics Corporation (NASDAQ:PRCT) management offered positive takeaways as the company believes it has a good handle on the two main issues that led to the FY22 guide down. The company’s CEO also indicated a high level of confidence that the impact from these issues is temporary and should be largely resolved by early 2023 or sooner, the analyst told investors in a research note.

According to Insider Monkey’s Q3 data, 11 hedge funds were bullish on PROCEPT BioRobotics Corporation (NASDAQ:PRCT), compared to 12 funds in the preceding quarter. Richard Driehaus’ Driehaus Capital is the leading position holder in the company, with 870,874 shares worth $36 million. 

10. Krystal Biotech, Inc. (NASDAQ:KRYS)

Number of Hedge Fund Holders: 15

Market Capitalization as of December 12: $1.829 Billion

Krystal Biotech, Inc. (NASDAQ:KRYS) is a Pennsylvania-based clinical stage biotechnology company that specializes in redosable gene therapy to treat serious rare diseases in the United States. It is one of the best healthcare stocks to consider. On November 17, Krystal Biotech, Inc. (NASDAQ:KRYS)’s Jeune Aesthetics subsidiary announced that phase 1 data from an extension cohort indicated that KB301, a gene-based treatment developed to address the underlying biology of aging skin to treat wrinkles and fine lines, indicated durability over nine months. Jeune now plans to start a phase 2 study of KB301 in H1 2023.

On November 7, Chardan analyst Geulah Livshits raised the price target on Krystal Biotech, Inc. (NASDAQ:KRYS) to $133 from $130 and kept a Buy rating on the shares. Following Q3 results, the analyst noted that Krystal Biotech, Inc. (NASDAQ:KRYS) now expects to continue patient dosing with topical KB105 in the next cohort of the Phase II in TMG1-mediated ARCI in early 2023. 

According to Insider Monkey’s third quarter database, Krystal Biotech, Inc. (NASDAQ:KRYS) was part of 15 hedge fund portfolios, compared to 12 in the prior quarter. The combined stakes held by elite funds in Q3 2022 increased to $389 million from $386.4 million in Q2 2022. Jeremy Green’s Redmile Group is the biggest stakeholder of the company, with approximately 2 million shares worth $132.4 million. 

9. Nuvalent, Inc. (NASDAQ:NUVL)

Number of Hedge Fund Holders: 15

Market Capitalization as of December 12: $1.75 Billion

Nuvalent, Inc. (NASDAQ:NUVL) was incorporated in 2017 and is headquartered in Cambridge, Massachusetts. It is a clinical stage biopharmaceutical company that develops therapies for patients with cancer. On October 28, Nuvalent, Inc. (NASDAQ:NUVL) reported initial data from the phase 1 part of a phase 1/2 trial of NVL-520 to treat patients with advanced ROS1-positive non-small cell lung cancer and other solid tumors. The trial had a favorable safety profile and provided positive results. Nuvalent, Inc. (NASDAQ:NUVL) stock climbed 72% upon reporting the data. It is one of the best healthcare stocks to monitor. 

On October 28, BMO Capital analyst Etzer Darout raised the price target on Nuvalent, Inc. (NASDAQ:NUVL) to $50 from $28 and kept an Outperform rating on the shares. The analyst cited the company’s initial dose escalation data for NVL-520, which he thinks serves as a clear indicator of its value proposition. Through the data cutoff, there were no treatment-related critical adverse events, the analyst told investors in a research note.

Among the hedge funds tracked by Insider Monkey, Nuvalent, Inc. (NASDAQ:NUVL) was part of 15 public stock portfolios at the end of September 2022, compared to 12 in the earlier quarter. James E. Flynn’s Deerfield Management is the largest stakeholder of the company, with 19.3 million shares worth $376 million. 

8. Xencor, Inc. (NASDAQ:XNCR)

Number of Hedge Fund Holders: 16

Market Capitalization as of December 12: $1.755 Billion

Xencor, Inc. (NASDAQ:XNCR) is a California-based clinical stage biopharmaceutical company focused on the discovery and development of engineered monoclonal antibody and cytokine therapeutics to treat patients with cancer and autoimmune diseases. In Q3 2022, Xencor, Inc. (NASDAQ:XNCR) reported a revenue of $27.3 million, up 38.7% year-over-year, outperforming estimates by $6.25 million. The company expects to conclude 2022 with about $575 million to $600 million in cash, cash equivalents, receivables, and marketable debt securities. It is one of the best small-cap healthcare stocks to invest in. 

On December 6, Cowen analyst Boris Peaker initiated coverage of Xencor, Inc. (NASDAQ:XNCR) with an Outperform rating without a price target. He forecasts Xencor, Inc. (NASDAQ:XNCR)’s partnered programs to generate revenue of up to $3 billion over the next decade from milestone and royalty payments, said the analyst, who also expects the company’s completely owned programs to “create further value as they advance.”

According to Insider Monkey’s Q3 data, 16 hedge funds were bullish on Xencor, Inc. (NASDAQ:XNCR), compared to 14 in the prior quarter. Oleg Nodelman’s EcoR1 Capital is the biggest stakeholder of the company, with 5.2 million shares worth $137.2 million. 

7. Immunovant, Inc. (NASDAQ:IMVT)

Number of Hedge Fund Holders: 17

Market Capitalization as of December 12: $1.871 Billion

Immunovant, Inc. (NASDAQ:IMVT) is a New York-based clinical-stage biopharmaceutical company that develops monoclonal antibodies for the treatment of autoimmune diseases. On November 7, H.C. Wainwright analyst Douglas Tsao raised the price target on Immunovant, Inc. (NASDAQ:IMVT) to $17 from $16 and kept a Buy rating on the shares. The company had a “fairly uneventful earnings release after a period of significant activity,” the analyst told investors in a research note.

According to Insider Monkey’s data, Immunovant, Inc. (NASDAQ:IMVT) was part of 17 hedge fund portfolios at the end of the third quarter of 2022, with collective stakes worth $97 million, compared to 11 in the prior quarter worth $48.8 million. David Kroin’s Deep Track Capital is the leading position holder in the company, with 9.86 million shares worth $55 million. 

6. Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX)

Number of Hedge Fund Holders: 18

Market Capitalization as of December 12: $1.705 Billion

Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX) is a Florida-based commercial-stage biopharmaceutical company that focuses on therapies for rare debilitating, chronic neuromuscular, and neurological diseases in the United States. On November 9, Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX) reported a Q3 non-GAAP EPS of $0.26 and a revenue of $57.24 million, outperforming Wall Street estimates by $0.07 and $3.55 million, respectively. Revenue for the period climbed 59.2% on a year-over-year basis. The company also raised its full-year 2022 forecast for total revenues to be in the range of between $205 million and $210 million, representing a 46% to 49% increase compared to 2021, versus a consensus of $205.03 million. 

On November 10, Piper Sandler analyst Joseph Catanzaro raised the price target on Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX) to $18 from $16 and maintained an Overweight rating on the shares. The company reported Q3 Firdapse revenues of $57.2 million, which were well above consensus, and raised Firdapse revenue to $205 million-$210 million, the analyst told investors. Firdapse continues to grow, supported by a low discontinuation rate and organic growth, including higher enrollment of tumor-LEMS patients, the analyst added.

According to Insider Monkey’s Q3 data, 18 hedge funds were bullish on Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX), compared to 16 in the prior quarter. Jim Simons’ Renaissance Technologies is a prominent stakeholder of the company, with 2.2 million shares worth $28.5 million. 

In addition to AbbVie Inc. (NYSE:ABBV), UnitedHealth Group Incorporated (NYSE:UNH), and Abbott Laboratories (NYSE:ABT), Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX) is one of the top stocks to consider for exposure to the healthcare sector.

Click to continue reading and see 5 Best Small-Cap Healthcare Stocks To Buy Now

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Disclosure: None. 12 Best Small-Cap Healthcare Stocks To Buy Now is originally published on Insider Monkey.

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