Even though the coronavirus outbreak induced an economic turmoil at the beginning of 2020, the U.S. Healthcare space undoubtedly emerged as one of the very few sectors that has so far managed to perform well amid the pandemic. Cutting-edge technology, rise in aging U.S. population, constant innovation to fight the COVID-19 and increase in telehealth visits proved to be beneficial for the healthcare stocks. The sector put up a good show this year, which is coming to a close.
Dominant Themes for 2021
Higher Frequency in Telemedicine: In response to the strict government regulations and higher demand for remote medical counselling, the companies took all necessary measures to boost telemedicine. As a result, telehealth services gained prominence like never before. People are able to get appointments online while staying indoors to curb the spread of the virus. Telehealth solutions proved advantageous to the companies in more ways than one as the same also helped them reduce costs significantly. We believe that this trend might continue even after the pandemic subsides as it is the new normal now. The telehealth market right now is flourishing and offers a pool of opportunities. Per a report by Arizton, the U.S. telehealth market is projected to witness a CAGR of 29% during the 2020-2025 forecast period.
Digital Transformation: Heathcare companies will continue to seek greater technological investment and innovation with an aim to reduce inefficiencies and wastages that bump up overall medical costs and lower the quality of care provided. The players are increasingly opting for the usage of big data, AI, analytics, informatics, machine learning, virtual assistant, etc. AI plays a huge role in combatting the coronavirus through various efforts, such as pandemic detection, vaccine development, analysing CT scans, thermal screening, facial recognition with masks, etc. IoT is also instrumental in enhancing patients’ experience when they resort to telemedicine.
Uptrend in Pharma Industry: Notably, the pharmacies and drug store market has also been a key catalyst for the healthcare sector’s outperformance amid the pandemic situation. As a matter of fact, the pharmaceutical companies went through several clinical trials and regulatory approvals for the development of an effective COVID-19 vaccine. The FDA authorization of the emergency use of the COVID-19 vaccine, jointly developed by Pfizer and BioNTech, is a result of these efforts. As we look into 2021, we expect the pharma industry to boom owing to the availability of COVID-19 vaccines and its much-anticipated raging demand. We expect some of the leading companies to start selling their vaccines soon.
Progress in Medical Device Industry: The medical device industry also gained momentum amid the coronavirus chaos. It should also be noted that the industry players took great measures to meet demand for diagnostic tests. With increasing adoption of digital platforms within the medical device space, remote monitoring, big-data analytics, 3D printing, bioprinting, electronic health records, predictive analytics, robotic surgeries, real-time alerting and revenue cycle management services are gaining prominence in the United States, and the same is expected to continue.
Rise in Behavorial Healthcare: With aggravated mental health issues triggered by the pandemic, addressing problems at the earliest stage became very crucial. Providing easy access to proper physical and mental healthcare is the need of the hour and companies across the healthcare system remain committed to this. It is needless to say that financial stress is one of the major reasons behind depression, anxiety, suicide attempts, etc. as unemployment levels continue to be high in the United States. Notably, the World Health Organization (WHO) also emphasized the need to address mental health issues of employees at workplaces. Leading companies in the industry, such as Magellan Health, Inc. MGLN unveiled programs and accumulate resources to help people deal with health matters during the holiday season.
We believe that the healthcare industry is well-poised for growth on the back of thriving digital innovation, growing strength of baby boomers, demand for online counselling, vaccines or treatments of the COVID-19, etc.
Recently, a few potential vaccines were tested to be both safe and effective. This means that this is the right time for investors to identify those companies that will continue with the rally or bounce back as things return to normalcy.
Stocks With a Promise to do Well in 2021
Here we pick four healthcare stocks that hold prospects to fare well in 2021. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AstraZeneca PLC AZN has a market capital of $133.68 billion and holds promise for hefty returns in 2021. The company is well-poised for growth on the back of its strong product portfolio, cost-cutting measures and an inorganic growth story. AstraZeneca is working on strengthening its oncology product portfolio through label expansions of its existing products and progressing oncology pipeline candidates. Though its COVID-19 vaccine is yet to show its efficacy, it could gain prominence in the market soon. The company has a Zacks Rank #3 (Hold). Over the past seven days, the company has witnessed its 2021 earnings estimate move 2.4% north. Its long-term growth rate stands at 14%, higher than the industry’s average of 7.2%. Year to date, shares of the company have gained 0.7%, underperforming its industry’s growth of 3%.
Quidel Corporation QDEL has been making efforts to combat the deadly coronavirus spread by expanding testing capabilities and rolling out molecular and antigen solutions needed to diagnose the COVID-19. It is a potential 2021 winner. It has a Zacks Rank #1. The company has a market cap of $7.97 billion. Its long-term growth rate stands at 25%, much higher than the industry’s average of 15.1%. Over the past 60 days, the company has witnessed its 2021 earnings estimate being revised 72.4% upward. Year to date, the company’s shares have skyrocketed 152.6%, higher than its industry’s average of 4.1%.
Repligen Corporation RGEN is a leading Medical-Products stock. It has a market capital of $10.61 billion and a Zacks Rank of 1. The company is progressing well with all its product franchisees, namely filtration, chromatography protein and process analytics. It has witnessed its 2021 earnings estimate move 1.8% north over the past 30 days. Its long-term growth rate stands at 30%, higher than the industry’s average of 20%. The company is well-poised for growth on the back of its solid momentum, decent solvency level and recent acquisitions. Year to date, the company’s shares have soared 109.7%, outperforming its industry’s growth of 9.8%.
LHC Group, Inc. LHCG provides enriched healthcare to more than 525,000 patients annually. With increasing number of baby boomers, the company is well set to grow in 2021. It has a market capital of $6.94 billion and a Zacks Rank of 3. It has witnessed its 2021 earnings estimate move 0.7% north. The company continues gaining from home health and hospice admissions with both witnessing organic growth on a year-over-year basis. Year to date, the stock has surged 59.5%, outperforming its industry’s growth of 35%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.
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AstraZeneca PLC (AZN) : Free Stock Analysis Report
Quidel Corporation (QDEL) : Free Stock Analysis Report
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Magellan Health, Inc. (MGLN) : Free Stock Analysis Report
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