In this article, we discuss 10 best healthcare stocks to buy in 2022.
The post-COVID world has highlighted several existing and emerging healthcare trends, such as shifting consumer preferences, the collaboration of life sciences and healthcare, new digital health technologies, younger talent, and clinical innovation. Amid uncertainty and a reinvented outlook for the public health sector, healthcare companies are benefiting from and adapting to changes such as remote working, virtual doctor visits, and supply chain challenges.
The growing transformation of the healthcare sector also includes IoT and AI-enabled algorithms and investments into technologies that will continue to enhance patient diagnosis and treatment, in addition to escalating focus on research and development.
Healthcare stocks are a huge component of the S&P 500 Index, and companies like Teladoc Health, Inc. (NYSE:TDOC), Abbott Laboratories (NYSE:ABT), and UnitedHealth Group Incorporated (NYSE:UNH) are some of the leading contenders in the sector.
Our Methodology
We selected healthcare stocks which received positive ratings from analysts in the last few weeks and were popular among the hedge funds tracked by Insider Monkey.
Data from 867 hedge funds monitored by Insider Monkey was used to assess the hedge fund sentiment around each stock.
Best Healthcare Stocks To Buy In 2022
10. Royalty Pharma plc (NASDAQ:RPRX)
Number of Hedge Fund Holders: 20
Royalty Pharma plc (NASDAQ:RPRX) is a leading American buyer of biopharmaceutical royalties, funding innovation across the biopharmaceutical industry. Royalty Pharma plc (NASDAQ:RPRX) partners with innovators from academic institutions, research hospitals and not-for-profits, small and mid-cap biotechnology companies, and pharmaceutical companies.
On January 6, Royalty Pharma plc (NASDAQ:RPRX) declared a $0.19 per share quarterly dividend, which is an 11.8% increase from its prior dividend of $0.17. The dividend is payable on March 15, to shareholders of record on February 18.
Tigress Financial analyst Ivan Feinseth on December 17 raised the price target on Royalty Pharma plc (NASDAQ:RPRX) to $52 from $50 and kept a Buy rating on the shares after the company’s “strong” Q3 results. The analyst, who sees “a long runway of investment opportunities” driving significant growth in revenue, cash flow, and dividend increases at Royalty Pharma plc (NASDAQ:RPRX), noted that his $52 price target represents a potential return of over 36% from current levels.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 20 funds were bullish on Royalty Pharma plc (NASDAQ:RPRX), with stakes totaling $1.96 billion. Adage Capital Management held the leading stake in Royalty Pharma plc (NASDAQ:RPRX), with 24.6 million shares worth $892.5 million.
9. Sage Therapeutics, Inc. (NASDAQ:SAGE)
Number of Hedge Fund Holders: 22
Sage Therapeutics, Inc. (NASDAQ:SAGE) is a Massachusetts-based biopharmaceutical company providing medicines to treat central nervous system disorders.
Needham analyst Ami Fadia on January 6 raised the price target on Sage Therapeutics, Inc. (NASDAQ:SAGE) to $85 from $79 and kept a Buy rating on the shares while naming the stock Needham Top Pick for 2022 and affirming its position on Needham’s Conviction List. The analyst is positive on the stock’s “setup” this year with several pipeline catalysts.
In the third quarter of 2021, 22 hedge funds were bullish on Sage Therapeutics, Inc. (NASDAQ:SAGE), down from 27 funds in the quarter earlier. D E Shaw held the largest stake in Sage Therapeutics, Inc. (NASDAQ:SAGE), with 1.25 million shares worth $55.6 million.
In addition to Teladoc Health, Inc. (NYSE:TDOC), Abbott Laboratories (NYSE:ABT), and UnitedHealth Group Incorporated (NYSE:UNH), Sage Therapeutics, Inc. (NASDAQ:SAGE) is a notable healthcare stock heading into 2022.
8. Bio-Rad Laboratories, Inc. (NYSE:BIO)
Number of Hedge Fund Holders: 38
Bio-Rad Laboratories, Inc. (NYSE:BIO) is a California-based manufacturer of specialized technological products for the life science research, medical laboratories, and clinical diagnostics markets.
Publishing its Q4 results on February 10, Bio-Rad Laboratories, Inc. (NYSE:BIO) reported earnings per share of $3.21, exceeding estimates by $0.34. The company’s revenue over the period totaled $732.77 million, surpassing estimates by $825,500.
On February 11, Citi analyst Patrick Donnelly raised the price target on Bio-Rad Laboratories, Inc. (NYSE:BIO) to $800 from $750 and kept a Buy rating on the shares after the Q4 results. The company guided 2022 well ahead of expectations, the analyst told investors in a bullish note.
Among the hedge funds tracked by Insider Monkey, 38 funds held long positions in Bio-Rad Laboratories, Inc. (NYSE:BIO) in the third quarter of 2021, down from 41 funds in the quarter earlier. Marshall Wace LLP held the biggest stake in Bio-Rad Laboratories, Inc. (NYSE:BIO) in Q3 2021, with 439,344 shares worth $327.7 million.
7. Teladoc Health, Inc. (NYSE:TDOC)
Number of Hedge Fund Holders: 40
Teladoc Health, Inc. (NYSE:TDOC) creates virtual healthcare services on a B2B basis in the United States and internationally, offering medical opinions, AI and analytics, and telehealth devices.
Goldman Sachs analyst Cindy Motz on February 11 initiated coverage of Teladoc Health, Inc. (NYSE:TDOC) with a Buy rating and a $121 price target. As the global leader in the virtual healthcare space, Teladoc Health, Inc. (NYSE:TDOC) is “uniquely positioned” to advance the overall integration of digital into healthcare, “paving the way for the healthcare technology sector to become more disruptive,” the analyst told investors in a research note.
On December 16, Teladoc Health, Inc. (NYSE:TDOC) announced an expanded partnership with the National Labor Alliance of Health Care Coalitions, the largest alliance of labor unions and labor management coalitions, to offer its full suite of virtual care products and services.
In Q3 2021, ARK Investment Management was the biggest stakeholder of Teladoc Health, Inc. (NYSE:TDOC), with 16.4 million shares worth more than $2 billion. Overall, 40 hedge funds were bullish on the stock in the third quarter of 2021, down from 43 funds in the quarter earlier.
Here is what Greenhaven Road Capital has to say about Teladoc Health, Inc (NYSE:TDOC) in its Q4 2021 investor letter:
“Teladoc Health (TDOC) – I agree with the common sentiment that we have seen the end of the tailwinds many companies enjoyed due to the massive customer behavior changes necessitated by staying home. Shares of “Covid beneficiaries” have sold off dramatically as a result. The share price of Teladoc Health (TDOC) is down >75% and instead of selling for 20X revenues, they are trading for less than 5X revenues.
What do we get at this reduced price? For starters, unlike many other “Covid beneficiaries,” Teladoc still expects to grow 25-30% per year for the next three years, regardless of progress to a more normalized environment. Is this plausible? For starters, management pre-announced revenues and reaffirmed their projections at the JPMorgan healthcare conference after their big selling season was complete, so there are indications that the company continues to believe. More importantly, the path to continued growth is primarily from selling additional products to existing customers. Over the past ten years,
Teladoc Health (TDOC) has evolved from being a Zoom solution for doctors to a much broader swath of comprehensive service offerings, including the delivery of mental healthcare, the monitoring of chronic conditions, lab testing, and specialist referrals. Teladoc is a telehealth provider that benefits from a large number of offerings as well as a broad geographic footprint in the U.S. and internationally. This scale enables it to provide a comprehensive solution for a health plan or a company making selections for large groups of patients. The benefits of scale are also realized on the development/product front, where there is a large base of 76M end customers to spread investments across. The net result of their product breadth and technology investments is that the company can provide “whole person care” on a purpose-built technology platform…” (Click here to see the full text)
6. Seagen Inc. (NASDAQ:SGEN)
Number of Hedge Fund Holders: 40
Seagen Inc. (NASDAQ:SGEN) is a Washington-based biotechnology company that creates antibody-based therapies for treating cancer. Among the hedge funds tracked by Insider Monkey, 40 funds were bullish on Seagen Inc. (NASDAQ:SGEN) in Q3 2021, up from 37 funds in the preceding quarter.
Publishing its Q4 earnings report on February 9, Seagen Inc. (NASDAQ:SGEN) posted a loss per share of $0.95, missing estimates by $0.08. Revenue over the period came in at roughly $430 million, surpassing estimates by $28.18 million.
Oppenheimer analyst Jay Olson lowered the price target on Seagen Inc. (NASDAQ:SGEN) on February 11 to $162 from $198 but kept an Outperform rating on the shares. While Seagen Inc. (NASDAQ:SGEN) delivered “solid” Q4 financial results overall with $176 million in Adcetris sales, management forecast negative growth for Tukysa in 2022, the analyst told investors in a research note. While the guidance may be disappointing, he remains optimistic on the long-term growth with continued label and geographical expansions in the near-term.
Seagen Inc. (NASDAQ:SGEN) is a popular healthcare stock among smart investors, just like Teladoc Health, Inc. (NYSE:TDOC), Abbott Laboratories (NYSE:ABT), and UnitedHealth Group Incorporated (NYSE:UNH).
Here is what Carillon Tower Advisers has to say about Seagen Inc. (NASDAQ:SGEN) in their Q4 2020 investor letter:
“Seagen Inc. (NASDAQ:SGEN) is a biotechnology company engaged in the development and commercialization of monoclonal antibody-based therapies for the treatment of cancer. The stock slumped a bit in the quarter after the firm announced it was lowering guidance for its drug Adcetris, which is an antibody medication used to treat lymphoma. We remain optimistic on the stock, primarily due to the company’s appealing pipeline of new products as well as the continued growth of Padcev (for metastatic urothelial cancer) and Tucatinib (for breast cancer).”
5. Zimmer Biomet Holdings, Inc. (NYSE:ZBH)
Number of Hedge Fund Holders: 47
Zimmer Biomet Holdings, Inc. (NYSE:ZBH) is an Indiana-based company that manufactures medical devices such as orthopedic reconstructive products and surgical instruments.
On February 7, Zimmer Biomet Holdings, Inc. (NYSE:ZBH) reported earnings for the fourth quarter, posting an EPS of $1.95, missing estimates by $0.03. Zimmer Biomet Holdings, Inc. (NYSE:ZBH)’s revenue for the period was $2.04 billion, missing market consensus estimates by $28.63 million.
Zimmer Biomet Holdings, Inc. (NYSE:ZBH) announced on February 7 that its board declared a pro rata dividend of 80.3% of the outstanding common stock of ZimVie, the spinoff of its dental and spine businesses, to Zimmer Biomet Holdings, Inc. (NYSE:ZBH) shareholders of record on February 15. The dividend is payable on March 1.
Loop Capital analyst Jason Wittes lowered the price target on Zimmer Biomet Holdings, Inc. (NYSE:ZBH) on February 9 to $140 from $165 after its Q4 earnings miss and FY22 guidance but kept a Buy rating on the shares. The company has a more “conservative” approach to COVID-19 than its peers, assuming another full year of impact from the pandemic while its peers expect at least some easing in the second half of the year, the analyst told investors in a bullish thesis.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 47 funds were long Zimmer Biomet Holdings, Inc. (NYSE:ZBH), with stakes totaling $1.6 billion, as compared to 48 funds holding stakes in Zimmer Biomet Holdings, Inc. (NYSE:ZBH) worth $1.78 billion in the preceding quarter. Viking Global held the leading stake in the company as of September 2021, with 3.40 million shares valued at approximately $499 million.
4. Anthem, Inc. (NYSE:ANTM)
Number of Hedge Fund Holders: 59
Anthem, Inc. (NYSE:ANTM) offers health insurance in the United States and is the largest managed healthcare company in the Blue Cross Blue Shield Association. In Q3 2021, 59 hedge funds were bullish on Anthem, Inc. (NYSE:ANTM), with stakes totaling $4.5 billion. Eagle Capital Management held more than 2.5 million shares of Anthem, Inc. (NYSE:ANTM) as of September 2021, worth 949.4 million, making it the leading company stakeholder.
Anthem, Inc. (NYSE:ANTM) published on January 26 its Q4 results. The company posted earnings per share of $5.14, beating estimates by $0.02. Revenue for the period came in at $36.02 billion, up 14.22% year-on-year, but missed estimates by $436.76 million.
On February 7, Argus analyst Jasper Hellweg raised the price target on Anthem, Inc. (NYSE:ANTM) to $500 from $475 and kept a Buy rating on the shares. The company continues to benefit from rising enrollments in its government segment, rate increases, and the expansion of its in-house pharmacy benefit manager, and the shares are also “attractively valued”, according to the analyst.
Here is what Nomadic Value Partners has to say about Anthem, Inc. (NYSE:ANTM) in their Q4 2020 investor letter:
“In mid-December we sold our position in Anthem (NYSE: ANTM). At the end of Q3 the Blue Cross Blue Shield Association (BCBSA), the umbrella organization for “blues” across the country, made a preliminary proposal to settle a multi-year antitrust case for $2.67 billion. This payment is to be made proportionate by each BCBSA health plan. The BCBSA covers about 100 million members nationwide and ANTM represents about 40% of total BCBSA membership. ANTM’s proportionate payment could be a $1 billion charge, nearly 25% of its expected 2020 earnings. Interestingly, the share price rallied on the news because included in the settlement proposal was BCBSA agreeing to lift restrictions on local BCBS plan geographic boundaries. BCBS plans can begin to horizontally integrate and compete in markets historically excluded from reach.”
The more I’ve thought about ANTM’s position in this hypothetical marketplace the more I’ve become less optimistic on them. While consolidation certainly brings better economics to the surviving health plan, I think it is only realistically available to much smaller companies. Looking back at anti-trust cases within healthcare over the last decade, the large health insurance companies are generally blocked from major horizontal acquisitions. Why would this change? This leaves ANTM competing in an increasingly crowded marketplace and the only strategy left to grow is to supercharge their vertical integration. ANTM is behind in integration, and I don’t like situations where a company is being forced to play catch up.”
3. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 63
Headquartered in Illinois, Abbott Laboratories (NYSE:ABT) is a multinational company providing branded generic medicines, medical devices, diagnostic assays, and nutritionals.
On January 26, Abbott Laboratories (NYSE:ABT) reported its Q4 results. The company posted earnings per share of $1.32, exceeding estimates by $0.11. Abbott Laboratories (NYSE:ABT)’s fourth quarter revenue came in at $11.47 billion, up 7.17% year-over-year, outperforming estimates by $760.41 million.
Abbott Laboratories (NYSE:ABT) on December 10 declared a $0.47 per share quarterly dividend, which is a 4.4% increase from its prior dividend of $0.45. The dividend will be paid on February 15, to shareholders of record on January 14.
Raymond James analyst Jayson Bedford on January 27 lowered the price target on Abbott Laboratories (NYSE:ABT) to $143 from $150 and kept an Outperform rating on the shares. According to the analyst, Abbott Laboratories (NYSE:ABT)’s base business was up 10% year-on-year in Q4 and this momentum is expected to continue into 2022, owing to exposure to two of the fastest growing medical tech markets, namely diabetes and structural heart.
Among the hedge funds tracked by Insider Monkey, 63 funds were bullish on Abbott Laboratories (NYSE:ABT) in Q3 2021, with stakes totaling $3.6 billion, as compared to 61 funds holding stakes worth $4.3 billion in Abbott Laboratories (NYSE:ABT) in the quarter earlier.
Here is what Saturna Capital Sextant Funds has to say about Abbott Laboratories (NYSE:ABT) in its Q3 2021 investor letter:
“Last quarter, Abbott Labs was among the top detractors as it sharply cut guidance on the expectation of fewer COVID-19 test kit sales. That conclusion turned out to be premature and was, in any event, short-term in nature.”
2. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 81
AbbVie Inc. (NYSE:ABBV) is a biopharmaceutical company providing medical products and clinical trials focused on immunology, oncology, neuroscience, eye care, and virology.
On February 2, AbbVie Inc. (NYSE:ABBV) reported earnings for the fourth quarter. The company posted an EPS of $3.31, beating estimates by $0.03. The $14.89 billion revenue missed estimates by roughly $73 million.
Mizuho analyst Vamil Divan raised the price target on AbbVie Inc. (NYSE:ABBV) on February 4 to $166 from $154 and kept a Buy rating on the shares. The analyst said that AbbVie Inc. (NYSE:ABBV)’s “more diversified growth story” beat expectations in Q4. He continues to see AbbVie Inc. (NYSE:ABBV) as a Top Pick.
AbbVie (NYSE:ABBV) declared on October 29 a $1.41 per share quarterly dividend, which is an 8.5% increase from its prior dividend of $1.30. The dividend is payable on February 15, to shareholders of record on January 14.
Warren Buffett’s Berkshire Hathaway held the biggest stake in AbbVie (NYSE:ABBV) in Q3 2021, with 14.3 million shares worth $1.5 billion. Overall, 81 hedge funds were bullish on AbbVie (NYSE:ABBV) in the third quarter of 2021, with stakes totaling $4.1 billion, as compared to 82 funds holding stakes in AbbVie (NYSE:ABBV) worth $5.3 billion in the preceding quarter.
Here is what Miller Howard Investments has to say about AbbVie Inc. (NYSE:ABBV) in its Q3 2021 investor letter:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) AbbVie (ABBV). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 95
UnitedHealth Group Incorporated (NYSE:UNH) is a Minnesota-based multinational insurance and managed healthcare company. UnitedHealth Group Incorporated (NYSE:UNH) is one of the most popular healthcare stocks among smart investors, with 95 funds holding stakes in the company as of Q3 2021, worth $11.70 billion.
UnitedHealth Group Incorporated (NYSE:UNH) posted Q4 results on January 19, announcing earnings per share of $4.48, beating estimates by $0.17. The $73.74 billion revenue outperformed estimates by $774.36 million.
On December 2, UnitedHealth Group Incorporated (NYSE:UNH) declared a quarterly dividend of $1.45 per share, in line with previous. The dividend was paid on December 14, to shareholders of record on December 6.
SVB Leerink analyst Whit Mayo raised the price target on UnitedHealth Group Incorporated (NYSE:UNH) to $550 from $480 and kept an Outperform rating on the shares on January 26. The analyst noted that results from Q4 were largely as expected. Against potential fading COVID-19 and political risks, Mayo can see the stock pushing a premium against the S&P 500.
Rajiv Jain’s GQG Partners, the biggest stakeholder of the company, held 3.6 million UnitedHealth Group Incorporated (NYSE:UNH) shares in Q3 2021, worth $1.4 billion.
Here is what Third Point Management has to say about UnitedHealth Group Incorporated (NYSE:UNH) in its Q3 2021 investor letter:
“UnitedHealth is one of the largest healthcare companies in the world and a market leader in both its insurance and healthcare services (Optum) businesses. We initiated our position during the 2020 Presidential election at a time of heightened political and regulatory uncertainty.
We believe under its new CEO, Andrew Witty, UnitedHealth can not only preserve its market dominance and sustain industry-leading growth rates across most of its key segments but also enter new healthcare services markets. Witty is known as a mission-driven CEO who clearly articulates his view that providing high-quality, affordable health care services is a social good. He receives consistently high marks from former colleagues, and we believe that his leadership approach will ballast and even strengthen UNH’s already impressive management and employee ranks. The insurance and services businesses are synergistic and complementary, which entrenches United’s critical role in care financing, access, and management. This dynamic gives us confidence in the durability of United’s market leadership…” (Click here to see the full text)
You can also take a look at Analysts are Recommending These 10 Stocks for 2022 and 10 Best High Dividend Stocks in Canada for 2022.
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Disclosure: None. 10 Best Healthcare Stocks To Buy In 2022 is originally published on Insider Monkey.
