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3 Medical Stocks Creating Wealth Despite Macro Challenges
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The broader U.S. indices, reflecting market sentiments, have been reeling under significant pressure so far in 2022 with companies from the majority of sectors facing several headwinds like a hawkish Fed, geopolitical issues and lingering COVID-19 uncertainties.
However, several companies managed to buck the trend and created wealth for their investors, driven by strong fundamentals. Some companies also initiated cost-savings programs along with price hikes to fight the rising cost of materials that benefited their margins.
Three stocks — Cardinal Health (CAH - Free Report) , Lantheus and TransMedics Group (TMDX - Free Report) — have managed to rise more than 50% year to date.
Below is a chart illustrating the year-to-date performance of all three stocks, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
All these three stocks had a strong rally so far this year, significantly beating the S&P 500’s performance. Moreover, all these three stocks carry a Zacks Rank #2 (Buy), indicating positive revisions in their respective earnings expectations. Let’s take a closer look at each one. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health
The company is a nationwide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers. It witnessed revenue growth in its major segment — Pharmaceutical — in the fourth quarter of fiscal 2022.
Cardinal Health’s diversified product portfolio and long-term supply agreements augur well. Meanwhile, its plans to build a new medical distribution center in the central Ohio area, its partnership with Innara Health and Kinaxis, and the introduction of the first surgical incise drape during the fourth quarter are likely to further boost revenues going forward. A solid solvency position is another plus.
The Zacks Consensus Estimate for its current fiscal year (FY23) earnings is pegged at $5.27, suggesting a year-over-year improvement of 4.2%. For FY24, estimates suggest a further 14% rise in the bottom line. Estimates for FY23 and FY24 have moved north by 1% in the past 60 days.
The forecast for year-over-year revenue growth is 8.8% for FY23 and 7.3% for FY24.
In addition, Cardinal Health rewards its shareholders above the industry average. CAH’s annual dividend currently yields roughly 2%, compared with the Zacks Medical - Dental Supplies industry’s average of 0%.
Lantheus is involved in developing, manufacturing, selling and distributing diagnostic medical imaging agents and products for diagnosing cardiovascular and other diseases. The company reported robust top and bottom-line growth for the third quarter of FY22 on the back of its key product, Pylarify — the PSMA PET imaging agent of choice. Strong quarterly results led the company to raise its revenue and adjusted earnings guidance by 2.5% and 7.5%, respectively, as measured at the midpoint of the earlier and new guided ranges.
The Zacks Consensus Estimate for its current fiscal year (FY22) earnings is $3.83, implying a year-over-year improvement of a whopping 682%. The FY23 estimates suggest a further 10% bottom-line growth. Estimates for FY22 and FY23 earnings improved 8.5% and 5%, respectively, in the past 60 days.
The expected year-over-year revenue uptick for FY22 is 115.5%, while that for FY23 is 11.9%.
Lantheus beat earnings estimates in all the past four quarters, with the average surprise being 51.09%.
The company has developed the Organ Care System to disrupt the decades-old standard of care for organ transplant therapy for end-stage organ failure patients across multiple disease states. TMDX’s technology represents a paradigm shift that transforms organ preservation for transplantation from a static state to a dynamic environment that enables new capabilities, including organ optimization and assessment.
TransMedics Group has demonstrated significant improvement for both the top and the bottom lines so far in 2022. During the third quarter of FY22, revenues grew more than 378% year over year, while loss narrowed 46.8%.
The Zacks Consensus Estimate for its current fiscal year (FY22) is pegged at a loss of $1.30, implying a year-over-year improvement of 18.8%. For FY23, estimates suggest a further improvement of 35.2% in the bottom line. Loss estimates for FY23 and FY24 have narrowed 17.7% and 16%, respectively, in the past 60 days.
The projected revenue growth is 185.7% for FY22 and 49.6% for FY23.
These three stocks, namely CAH, LNTH and TMDX have entirely ignored the market’s woes in 2022, delivering substantial gains to investors. Moreover, the recent improvement in EPS estimates for these stocks indicates strengthening prospects. This, coupled with a favorable Zacks Rank, suggests a likely continuation of the upward movement of these stocks.
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3 Medical Stocks Creating Wealth Despite Macro Challenges
The broader U.S. indices, reflecting market sentiments, have been reeling under significant pressure so far in 2022 with companies from the majority of sectors facing several headwinds like a hawkish Fed, geopolitical issues and lingering COVID-19 uncertainties.
However, several companies managed to buck the trend and created wealth for their investors, driven by strong fundamentals. Some companies also initiated cost-savings programs along with price hikes to fight the rising cost of materials that benefited their margins.
Three stocks — Cardinal Health (CAH - Free Report) , Lantheus and TransMedics Group (TMDX - Free Report) — have managed to rise more than 50% year to date.
Below is a chart illustrating the year-to-date performance of all three stocks, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
All these three stocks had a strong rally so far this year, significantly beating the S&P 500’s performance. Moreover, all these three stocks carry a Zacks Rank #2 (Buy), indicating positive revisions in their respective earnings expectations. Let’s take a closer look at each one. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health
The company is a nationwide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers. It witnessed revenue growth in its major segment — Pharmaceutical — in the fourth quarter of fiscal 2022.
Cardinal Health’s diversified product portfolio and long-term supply agreements augur well. Meanwhile, its plans to build a new medical distribution center in the central Ohio area, its partnership with Innara Health and Kinaxis, and the introduction of the first surgical incise drape during the fourth quarter are likely to further boost revenues going forward. A solid solvency position is another plus.
The Zacks Consensus Estimate for its current fiscal year (FY23) earnings is pegged at $5.27, suggesting a year-over-year improvement of 4.2%. For FY24, estimates suggest a further 14% rise in the bottom line. Estimates for FY23 and FY24 have moved north by 1% in the past 60 days.
The forecast for year-over-year revenue growth is 8.8% for FY23 and 7.3% for FY24.
In addition, Cardinal Health rewards its shareholders above the industry average. CAH’s annual dividend currently yields roughly 2%, compared with the Zacks Medical - Dental Supplies industry’s average of 0%.
Cardinal Health, Inc. Price
Cardinal Health, Inc. price | Cardinal Health, Inc. Quote
Lantheus
Lantheus is involved in developing, manufacturing, selling and distributing diagnostic medical imaging agents and products for diagnosing cardiovascular and other diseases. The company reported robust top and bottom-line growth for the third quarter of FY22 on the back of its key product, Pylarify — the PSMA PET imaging agent of choice. Strong quarterly results led the company to raise its revenue and adjusted earnings guidance by 2.5% and 7.5%, respectively, as measured at the midpoint of the earlier and new guided ranges.
The Zacks Consensus Estimate for its current fiscal year (FY22) earnings is $3.83, implying a year-over-year improvement of a whopping 682%. The FY23 estimates suggest a further 10% bottom-line growth. Estimates for FY22 and FY23 earnings improved 8.5% and 5%, respectively, in the past 60 days.
The expected year-over-year revenue uptick for FY22 is 115.5%, while that for FY23 is 11.9%.
Lantheus beat earnings estimates in all the past four quarters, with the average surprise being 51.09%.
Lantheus Holdings, Inc. Price
Lantheus Holdings, Inc. price | Lantheus Holdings, Inc. Quote
TransMedics Group
The company has developed the Organ Care System to disrupt the decades-old standard of care for organ transplant therapy for end-stage organ failure patients across multiple disease states. TMDX’s technology represents a paradigm shift that transforms organ preservation for transplantation from a static state to a dynamic environment that enables new capabilities, including organ optimization and assessment.
TransMedics Group has demonstrated significant improvement for both the top and the bottom lines so far in 2022. During the third quarter of FY22, revenues grew more than 378% year over year, while loss narrowed 46.8%.
The Zacks Consensus Estimate for its current fiscal year (FY22) is pegged at a loss of $1.30, implying a year-over-year improvement of 18.8%. For FY23, estimates suggest a further improvement of 35.2% in the bottom line. Loss estimates for FY23 and FY24 have narrowed 17.7% and 16%, respectively, in the past 60 days.
The projected revenue growth is 185.7% for FY22 and 49.6% for FY23.
TransMedics Group, Inc. Price
TransMedics Group, Inc. price | TransMedics Group, Inc. Quote
Bottom Line
These three stocks, namely CAH, LNTH and TMDX have entirely ignored the market’s woes in 2022, delivering substantial gains to investors. Moreover, the recent improvement in EPS estimates for these stocks indicates strengthening prospects. This, coupled with a favorable Zacks Rank, suggests a likely continuation of the upward movement of these stocks.