Despite having outperformed the market as a whole in 2022, experts from morning star they think there are still investment opportunities in the healthcare sector“a defensive industry that usually acts as a refuge in bear markets”.
Specifically, the aforementioned analysts point out that, Of the 96 companies in the sector that have reviewed, 58.8% are currently “undervalued”.
WHAT KIND OF COMPANIES BELONG TO THIS SECTOR?
The healthcare umbrella includes various kinds of companies: biotechnology, drug manufacturers, health care plans, health care providers and services, medical devices and instruments, diagnostics and research, and medical distribution.
Some of the largest companies in this sector are UnitedHealth, Johnson & Johnson, or Eli Lilly.
THE TEN “MOST UNDERVALUED” COMPANIES
And, of all of them, Morningstar selects those to which it grants greater lasting competitive advantageswhich is known as ‘moat’ or economic moat.
GlaxoSmithKline and Zimmer Biomet Holdings are the companies that these analysts consider to be trading with a higher discount compared to its fair value: close in both cases to 30%.
Of the British, these experts point out that “investors are failing to fully appreciate their growth potential and competitive advantages linked to its patents, economies of scale and a powerful distribution network”. They also hope that their new products in development will mitigate the certain dependence on sales of their most important drug, Triumeq.
As for the American company, Morningstar praises the close relationships the firm cultivates with orthopedic surgeons and its strategy to accelerate growth through innovative products.
Medtronic It is another of the titles that, according to these analysts, has “interesting potential”. Thus, highlight your leadership in medical devices and its “diversified portfolio aimed at a wide range of products for intensive care and based on constant innovation”.
These experts are also optimistic with Rochea leading company in biotechnology and diagnostics, “which is located in a unique position to lead medical care with personalized and cost-effective treatment”.
Fifth, these analysts mention Bayern“who recently unveiled some solid results, higher than expected. Furthermore, they believe that Your business linked to crop science will strengthen your competitive advantages and indicate that their new drugs for cancer and kidney disease are starting to pay off. “Generally, the German company is poised for steady sales and profit growth over the next five years”.
Your sixth bet is Veeva, a leading provider of cloud-based software solutions tailored to the life sciences industry. “Your high customer retention should continue to support group earnings for at least the next 20 years”, they emphasize from Morningstar.
Another of the companies that these analysts consider “undervalued” is Sanofiof which they value their line of drugs, such as Dupixent, oriented to immunological diseases. Likewise, they extol their “strong position in several vaccines and medicines for rare diseasessegments that have less competitive pressure”.
Eighth place on this list goes to West Pharmaceutical Servicesa world leader in delivery components and primary packaging for injectable therapies, “proving to be a reliable supplier, which brings strong intangible assets”. So, they think its growth will continue to be “quite resilient”.
AstraZeneca is another of the companies mentioned by Morningstar within the health sector. Specifically, its analysts affirm that its portfolio of projects “is emerging as one of the most solid in the sector” and they are confident potential of several of its drugs in developmentespecially those launched by the company against cancer.
Finally, these experts also see potential in zoetis, despite the growth problems reflected in the third quarter results presented by the company. “Zoetis continues to enjoy a solid position in the companion animal segment and we believe it has the most notable competitive advantages in that sector”. In addition, they point out that his innovations in dermatology, parasiticides and monoclonal antibodies are already generating results.
