The medical sector is growing amid rising health awareness, an aging population, and technological advancements. Moreover, the healthcare sector is largely immune to economic turmoil. So, investors could consider buying Agilent Technologies, Inc. (A), Qiagen N.V. (QGEN), and Harvard Bioscience, Inc. (HBIO). These stocks are Buy-rated in our proprietary rating system.
Revenue in the healthcare market is expected to grow at 12.9% CAGR until 2027, resulting in a market volume of $27.67 billion.
Moreover, investments in advanced technologies like Artificial intelligence are increasing. AI is rapidly being employed in the healthcare sector to assist in managing the rising demand for high-quality treatment. According to a TMR analysis, the industry is expected to be worth $187.76 billion in 2031, growing at a CAGR of 40.1%.
The global medical devices market is expected to grow at a 5.5% CAGR until 2030, driven by increasing investment in Research & Development (R&D) and easy approval by the regulatory authorities. Also, increasing the adoption of 3D printing of medical devices should boost the industry.
Investors’ interest in medical stocks is evident from the iShares Global Healthcare ETF (IXJ) 2.1% returns over the past three months.
Let’s delve deeper into the fundamentals of the stocks mentioned above.
Agilent Technologies, Inc. (A)
A is a provider of application-focused solutions for the entire laboratory workflow. The company operates in the life sciences, diagnostics, and applied chemical markets.
On April 3, 2023, A announced the latest addition to the Cary 3500 UV-Vis Series with the release of the Agilent Cary 3500 Flexible UV-Vis System.
This innovative approach uses a double-beam spectrophotometer with superior photometric performance for several sample-type measurements with less sample preparation. The series can be used in regulated situations, particularly in the pharma/biopharma sector.
A’s trailing-12-month EBITDA margin of 28.99% is significantly higher than the industry average of 1.93%. Its trailing-12-month asset turnover ratio of 0.66% is 88.5% higher than the industry average of 0.35%.
For the second quarter that ended February 3, 2023, A’s net revenue increased 6.8% year-over-year to $1.72 billion. Its income from operations increased 6.4% from the year-ago value to $383 million.
Moreover, the company’s non-GAAP net income increased 10.9% year-over-year to $377 million, while non-GAAP EPS came in at $1.27, up 12.4% year-over-year.
The consensus revenue estimate of $7.43 billion for the year ending October 2024 represents a 6.5% increase year-over-year. Its EPS is expected to grow at 9.1% year-over-year to $6.14 for the same period. A’s shares have lost marginally intraday to close the last trading session at $119.49.
A’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
A has a B grade for Value and Quality. It is ranked #5 out of 54 stocks in the Medical - Diagnostics/Research industry. Click here for the additional POWR Ratings for Growth, Value, Sentiment, and Momentum for A.
Qiagen N.V. (QGEN)
Headquartered in Venlo, the Netherlands, QGEN offers a sample to insight solutions that transform biological materials into molecular insights worldwide.
QGEN’s trailing-12-month EBIT margin of 28.16% is significantly higher than the 1.93% industry average. Its trailing-12-month gross profit margin of 66.52% is 19.1% higher than the 55.84% industry average.
QGEN’s total current liabilities came in at $890.24 million for the period that ended March 31, 2023, compared to $974.52 million for the period that ended December 31, 2022. Also, its total long-term liabilities came in at $1.83 billion, compared to $1.85 billions for the same period.
Analysts expect QGEN’s revenue to increase 7.7% year-over-year to $2.22 billion in 2024. Its EPS is expected to grow 7.5% to $2.28 in 2024. It surpassed EPS estimates in all four trailing quarters. The stock has gained 3.3% over the past month to close its last trading session at $45.61.
It’s no surprise that QGEN has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade for Stability, Sentiment, and Quality. It is ranked #3 in the same industry.
Beyond what is stated above, we’ve also rated QGEN for Growth, Momentum, and Value. Get all QGEN ratings here.
Harvard Bioscience, Inc. (HBIO)
HBIO develops, manufactures, and sells technologies, products, and services for life science applications in the United States and internationally.
HBIO’s forward EV/Sales multiple of 2.36 is 34.4% lower than the industry average of 3.60. Its forward Price/Sales multiple of 1.97 is 53.7% lower than the industry average of 4.25.
HBIO’s trailing-12-month EBITDA margin of 4.82% is 149.6% higher than the 1.93% industry average. Its trailing-12-month asset turnover ratio of 0.75x is 114.6% higher than the 0.35x industry average.
For the fourth quarter that ended January 31, 2023, HBIO’s revenue increased by 4.2% to $29.98 million. Its adjusted EBITDA increased 77.8% year-over-year to $4.80 million.
Also, its net income and EPS came in at $622,000 and $0.01, compared to a net loss and net loss per share of $6.88 million and $0.17 in the previous year’s quarter, respectively.
Street expects HBIO’s revenue to increase 6.4% year-over-year to $120.60 million in 2023. Its EPS is expected to increase 108.3% year-over-year to $0.25 for the same period. Over the past six months, the stock has gained 133.6% to close the last trading session at $5.63.
HBIO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #4 in the same industry. It has an A grade for Sentiment and a B for Value. To see additional HBIO’s rating for Momentum, Stability, Growth, and Quality, click here.
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A shares were trading at $119.04 per share on Friday morning, down $0.45 (-0.38%). Year-to-date, A has declined -20.33%, versus a 9.96% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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