Of all the types of stocks you could invest in, healthcare stocks have been the second best performing stock over the past 50 years. And yet, health stocks in 2019 lagged the market averages and even outperformed the broader S&P 500 by almost 10 percentage points.
Will 2020 be the year that the healthcare system recovers and the market trumps again?
<p class = "Canvas-Atom Canvas-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Maybe yes, maybe no. Given the durability of The Outperformance healthcare sector – half a century in which we have beaten the market – seems that healthcare has an advantage over other types of stocks, and we have been looking for certain healthcare recommendations that could outperform in the new year TipRanks consulted. Stock screener and come up with a trio of tips, the Evercore ISI analyst Vijay Kumar expects to outperform in 2020. "data-reactid =" 13 "> Maybe yes, maybe no, given the ongoing health care outperformance – half a century of market hit – health care seems to have a built-in advantage over others looking for specific recommendations for Healthcare that could outperform in the new year, we looked at TipRanks & # 39; Stock Screener and developed three recommendations that ISI analyst Vijay Kumar of Evercore expects to outperform in 2020.
<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "Baxter International (BAX)"data-reactid =" 14 ">Baxter International (BAX)
Deerfield, Illinois-based Baxter International had a pretty good year in 2019, ending the year up 30%. The numbers would have been even better if Baxter hadn't had to announce in his Q3 report that an internal investigation into the accounting of exchange rate gains had been initiated, with market capitalization cut by 12.5% in weeks.
The positive side of this news for new investors, of course, is that Baxter's share price retreat has created "a nice entry point" into the share, says Kumar.
According to Kumar, Baxter's review will "be completed shortly and have no operational impact" on the company, which the analyst's earnings will increase 11% this year. And after completing the audit, Kumar sees that Baxter can grow its sales by at least 5% to 6% between 2021 and 2025, with an increase in earnings per share.
<p class = "Canvas-Atom-Canvas-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "As a result, Kumar updates Baxter's inventory of" in the Line "(ie" hold ") to" outperform "rating alongside a price target of $ 94, which implies almost 9% up from today's prices. Click here) "data-reactid =" 18 "> As a result, Kumar ranks Baxter's stock from" in-line "(ie" hold ") to" outperform "rating, along with a target price of $ 94, an increase of almost 9% compared to today's rates. (To see Kumar's track record, click here)
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Incidentally, this is the conservative position on Wall Street Buy ratings outperformed hold dates 3 to 1 last month (excluding sales), and street analysts are forecasting an average price target of $ 95.29 per share – 11% higher than current prices. (See Baxter stock analysis on TipRanks) "data-reactid =" 19 "> Incidentally, this is the conservative position. On Wall Street, last month's buy ratings (without sales) outweighed the 3 to 1 hold ratings and on average the street analysts forecast a price target of 95.29 USD per share – 11% above current prices (see Baxter stock analysis at TipRanks).
<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "PerkinElmer (PKI)"data-reactid =" 28 ">PerkinElmer (PKI)
The next company is PerkinElmer, a diagnostics and life science company based in Waltham, Massachusetts. PerkinElmer is already on the road with a price of more than 47 times the earnings gap. Most analysts see that the stock will not rise, but will fall 2% or 3% over the next 12 months (consensus target: $ 96.33 per share). Regardless, this is another Kumar's favorite pick that scores above average and has a price target of $ 114 that is 15% above today's prices.
Why does Kumar like it?
"We believe PKI is massively underestimated by the street," said Kumar, who believes that PerkinElmer is being wrongly punished for announcing a cut in sales forecasts last year despite a three-digit increase in its operating profit margin ,
Kumar relies on President Trump's announcement of an armistice in China on New Year's Eve and sees an upward trend in Chinese sales in 2020 and introduces new products that will create a "potential plus for EPS" in the new year. In particular, Kumar predicts that PerkinElmer's investors will see a more than double profit this year, which may amount to perhaps $ 4.74 per share. Growth will then slow to 20% in 2021 (EPS: $ 5.33) – still better than the average growth of the S&P 500.
<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "Varian Medical Systems (VAR)"data-reactid =" 46 ">Varian Medical Systems (VAR)
Last but not least, Varian Medical Systems is a stock that received only a "buy" rating from Wall Street last year with one exception (RBC Capital).
Surprise, surprise, Kumar likes them too.
With a target price of $ 164 (nearly $ 20 above today's $ 148.80 target and about 10% above the $ 148.80 street consensus target), Varian believes that Varian sells both medical devices and software products cancer treatment enters a series of new product cycles that will result in organic earnings growth of 8% to 11% and potential total earnings growth in the "teenagers".
Here, as at PerkinElmer, Kumar sees China as a catalyst, combined with new products and the "bundling" of products and services in order to increase sales. Based on these assumptions, the analyst forecasts Varian sales growth of 12.5% in 2020 to USD 3.6 billion, followed by 8% growth in USD 3.9 billion in 2021. As if not yet good enough, the analyst predicts earnings per share will increase 70% this year to $ 5.40 per share and still a respectable 15% next year (to $ 6.21 per share).
With numbers like these, Kumar Varian believes it is a best-in-class business and a top choice in the healthcare sector.
<p class = "Canvas Atom Canvas Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Good ideas for trading in health stocks at the fair find value or better, visit TipRanks Best stocks to buy"data-reactid =" 52 "> To find good ideas for healthcare stocks that are trading at fair value or better, visit TipRanks & # 39; Best Stocks to Buy, a newly launched tool that provides all equity insights from TipRanks unites all Equity Insights from TipRanks.