Kalkine Media explores top healthcare stocks to watch right now

Cardinal Health, Inc. (NYSE: CAH), Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX), Cigna Corporation (NYSE: CI), Eli Lilly and Company (NYSE: LLY), and Merck & Company Inc. (NYSE: MRK) are among the popular companies in the US healthcare segment.

The healthcare sector became more prominent after the COVID-19 pandemic as investors focused on it.

Given this year's highly volatile condition in the broader market, investors are looking for stocks to tackle the current situation. The market sharply declined in 2022, especially in the two quarters, before reversing course over a summer rally.

However, the rally also didn't last long, as concerns over higher interest rates could tip the economy into a recession. The hawkish remarks of the Fed officials, backing further rate hikes to tame inflation, had weighed on the market sentiment.

Now, the investors are betting on another 75-basis point hike or at least a half-point increase in the upcoming meeting of the Federal Reserve. The investors grew concerned over the macroeconomic headwinds and are looking for safer investments amid the uncertainties.

Notably, the FDA had given authorization for Covid booster shots on August 31, targeting the omicron BA.5 subvariant of the virus. The US could prepare for another increase in infections in the coming months.

Let's look at some of the biotech stocks and their recent performance.

Cardinal Health, Inc. (NYSE: CAH)

Cardinal Health is a popular healthcare firm that aims to provide patient care while reducing costs. The US$ 19.03 billion market cap firm had a dividend yield of 2.79 per cent. The P/E ratio of Cardinal Health was 10.49.

The CAH stock surged more than 35 per cent YTD while increasing over 31 per cent in the one year. Its price jumped over 33 per cent in the current quarter.

The stock of the healthcare firm closed at US$ 69.89 on September 9, down by over three per cent from its 52-week high of US$ 72.28 noted on September 2, 2022.

The revenue of Cardinal Health was US$ 47.1 billion in the fourth quarter of fiscal 2022, an increase of 11 per cent from US$ 42.6 billion in the year-ago quarter. Its attributable net earnings were US$ 138 million in Q4 FY22, a jump of 19 per cent from US$ 116 million in Q4 FY21.

For fiscal 2022, the Dublin, Ohio-based firm posted a net loss of US$ 933 million on revenue of US$ 181.4 billion. In the previous year, its net earnings were US$ 611 million on revenue of US$ 162.5 billion.

Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX)

Vertex Pharmaceuticals is a leading biopharmaceutical firm with a market cap of over US$ 74.70 billion. The firm had a P/E ratio of 23.61. The stock of Vertex Pharmaceuticals touched its 52-week high of US$305.95 on August 15, 2022.

The VRTX stock added more than 33 per cent YTD while soaring over 55 per cent YoY. In the ongoing quarter, it had gained more than three per cent. It closed at US$ 292.11 on September 9, up by 1.08 per cent from its previous close.

The company's total product revenue was US$ 2.19 billion in Q2 FY22, an increase of 22 per cent from US$ 1.79 billion in the same quarter of the prior year. Meanwhile, the GAAP net income was US$ 810 million in Q2 FY22, significantly up from US$ 67 million in Q2 FY21.

The Boston, Massachusetts-based firm also raised its product revenue guidance range to US$ 8.6 billion- US$ 8.8 billion in fiscal 2022, up from its previous guidance range of US$ 8.4 billion to US$ 8.6 billion.

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Cigna Corporation (NYSE: CI)

Cigna Corporation is a leading healthcare and insurance firm with a dividend yield of 1.54 per cent. Its P/E ratio was 17.46, while its market cap stood at US$ 92.91 billion after closing at US$ 292.84 on September 9.

The CI stock gained more than 27 per cent in the running year while adding over 11 per cent quarter-to-date (QTD). It also posted a positive return of 36 per cent in the last 52 weeks. The CI stock hit its 52-week high of US$ 293.96 on August 19, 2022.

The Bloomfield, Connecticut-based firm posted total revenue of US$ 45.48 billion in Q2 FY22, comparatively up from US$ 43.13 billion in the comparable quarter of the preceding year. The net income of Cigna Corporation available to common shareholders was US$ 1.55 billion in Q2 FY22, up from US$ 1.46 billion in fiscal 2021 second quarter.

The healthcare and insurance company expects its adjusted revenue to be at least US$ 178 billion for fiscal 2022.

Eli Lilly and Company (NYSE: LLY)

Eli Lilly is one of the leading pharmaceutical firms with a market cap of US$ 301.86 billion. The company had a P/E ratio of 50.67, while its dividend yield stood at 1.26 per cent through September 9.

The LLY stock gained more than 15 per cent YTD while increasing more than 32 per cent YoY. On a QTD basis, it lost nearly two per cent after closing at US$ 317.7 on September 9, down by about five per cent from its 52-week high of US$ 335.33 noted on July 15, 2022.

The revenue of Eli Lilly and Company decreased by four per cent YoY to US$ 6.48 billion in Q2 FY22. Its reported net income totalled US$ 952.5 million in the latest quarter of this year, noting a decrease of 31 per cent from US$ 1.39 billion in the second quarter of the prior year.

The Indianapolis, Indiana-based company expects it is fiscal 2022 revenue to be between US$ 28.8 billion and US$ 29.3 billion.

Merck & Company Inc. (NYSE: MRK)

Merck & Co is another leading pharmaceutical firm with a market cap of US$ 220.86 billion. Its P/E was 13.38, while its dividend yield was 3.18 per cent. The annualized dividend of Merck was US$ 2.76.

The MRK stock soared nearly 14 per cent YTD while gaining over 18 per cent YoY. However, its price dropped by over four per cent QTD after closing at US$ 87.34 on September 9.

The firm's stock had an RSI of about 43, suggesting that the stock could be highly volatile at the moment.

Kenilworth, the New Jersey-based company, posted a total sales of US$ 14.59 billion in Q2 FY22, showing a surge of 28 per cent YoY. Its GAAP net income was US$ 3.94 billion in the fiscal 2022 second quarter, against an income of US$ 1.21 billion in Q2 FY21.

Merck expects its total sales to be between US$ 57.5 billion and US$ 58.5 billion in fiscal 2022. It also provided a guidance range of US$ 5.89 to US$ 5.99 apiece for its earnings-per-share (EPS) in fiscal 2022.

Bottom line

Several healthcare stocks have provided higher returns to investors while generating strong revenue during the pandemic. Healthcare was one of the best-performing sectors, but it even declined due to an overall volatile market.

The S&P 500 healthcare sector lost nearly three per cent YoY while decreasing about seven per cent in the running year. In the ongoing quarter, the healthcare segment of the S&P 500 index gained 1.63 per cent.