The healthcare industry’s prospects look promising, thanks to growing medical needs and technology upgrades. Moreover, due to inelastic demand for their products and services, healthcare companies tend to perform relatively well regardless of economic conditions.
Therefore, quality medical stocks Fresenius SE & Co. KGaA (FSNUY), Natures Sunshine Products, Inc. (NATR) and LifeVantage Corporation (LFVN) could be worth buying for weekly profit.
The aging population and the rise in chronic Non-Communicable Diseases (NCDs) provide opportunities for the healthcare sector to expand to address people’s medical needs. Moreover, the healthcare industry is increasingly leveraging technology to stay ahead.
Medical technological advancements, such as AI and gene editing, are transforming disease detection and treatment, increasing the likelihood of favorable outcomes in the healthcare industry.
As a result, revenue in the digital health market is projected to reach $44.45 billion in 2023. The revenue is expected to expand at a CAGR of 8.5% to reach $66.96 billion by 2028.
The healthcare services industry, estimated at $10.30 trillion in 2021, is expected to increase at a CAGR of 8.3% between 2023 and 2030 due to rising healthcare expenditures. By 2030, the market is expected to reach $21.06 trillion.
Considering these conducive trends, let’s examine the fundamentals of the three medical stock picks mentioned above.
Fresenius SE & Co. KGaA (FSNUY)
Based in Bad Homburg vor der Höhe, Germany, FSNUY is a healthcare company that operates through segments like Fresenius Medical Care; Fresenius Kabi; Fresenius Helios; and Fresenius Vamed. It caters to patients with chronic kidney failure, critically and chronically ill patients, and healthcare facilities, offering a range of medical products and operational management services.
On November 14, FSNUY announced advancements in its Vision 2026 strategy by transferring ownership of its plant in Halden, Norway, to HP Halden Pharma AS, a Prange Group company. In collaboration with Adragos Pharma, the Prange Group will take over the plant, including equipment and staff, ensuring the ongoing production of FSNUY’s products. This move aligns with FSNUY’s goal to streamline operations and enhance efficiency in its worldwide manufacturing network.
On November 8, FSNUY sold fertility services group Eugin to IVI RMA (KKR portfolio company) and GED Capital for up to €500 million ($545.24 million), focusing on core business areas. The transaction should be strategically beneficial for FSNUY.
FSNUY’s trailing-12-month EBIT margin of 7.10% is significantly higher than the industry average of 0.61%. It’s EBITDA margin of 11.26% is 112.7% higher than the industry average of 5.29%.
In the third quarter ended September 29, 2023, FSNUY’s revenue amounted to €5.52 billion ($6.04 billion), up 2.5% year-over-year. Its operating income (EBIT) amounted to €346 million ($378.69 million). The company’s gross profit also stood at €1.27 billion ($1.39 billion).
Street expects FSNUY’s revenue to grow 5% year-over-year to $25.88 billion for the fiscal year ending December 2024.
Shares of FSNUY increased 18.6% over the past year and 12% over the past nine months to close the last trading session at $7.73.
FSNUY’s POWR Ratings reflect its robust prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
FSNUY has an A grade for Value and a B grade for Stability and Quality. Within the Medical – Hospitals industry, it is ranked first out of 11 stocks.
In addition to the POWR Ratings stated above, one can access FSNUY’s additional Growth, Momentum, and Sentiment ratings here.
Natures Sunshine Products, Inc. (NATR)
NATR is a natural health and wellness company that manufactures and sells nutritional and personal care products in Asia, Europe, North America, Latin America, and internationally.
NATR’s trailing-12-month gross profit margin of 72.18% is 113% higher than the 33.89% industry average. Its trailing-12-month asset turnover ratio of 1.90x is 125.2% higher than the 0.84x industry average.
For the fiscal third quarter that ended September 30, 2023, NATR’s net sales increased 6.4% year-over-year to $111.20 million, while gross profit stood at $81.24 million, up 8.5% from the prior-year quarter. Its adjusted EBITDA grew 50% from the year-ago value to $10.25 million.
For the same quarter, non-GAAP net income attributable to common shareholders and adjusted income per share came at $2.83 million and $0.15, compared to a non-GAAP net loss and adjusted loss per share of $1.05 million and $0.06 in the prior-year quarter.
Analysts expect NATR’s revenue to increase 8.1% year-over-year to $111.10 million for the quarter ending December 2023. Its EPS is expected to grow 50% year-over-year to $0.15 for the same period. It surpassed consensus revenue and EPS estimates in each of the four trailing quarters.
The stock has gained 113.8% year-to-date to close the last trading session at $17.79. Over the past year, it has gained 97.5%.
It’s no surprise that NATR has an overall A rating, equating to a Strong Buy in our POWR Ratings system.
It has an A grade for Value, Sentiment and Quality and a B for Growth and Stability. It is ranked first within the 10-stock A-rated Medical – Consumer Goods industry.
Beyond what is stated above, we’ve also rated NATR for Momentum. Get all NATR ratings here.
LifeVantage Corporation (LFVN)
LFVN engages in identifying, researching, developing, formulating, selling, and distributing nutrigenomic activators, dietary supplements, nootropics, pre- and pro-biotics, weight management, skin and hair care products, bath and body, and targeted relief products.
LFVN’s trailing-12-month asset turnover ratio of 3.17x is 277.2% higher than the 0.84x industry average. Its trailing-12-month gross profit margin of 79.52% is 134.6% higher than the 33.89% industry average.
For the fiscal first year ended September 30, 2023, LFVN’s revenue and gross profit amounted to $51.36 million and $41.18 million, respectively. The company’s non-GAAP net income and EPS increased 139.7% and 116.7% from prior year values to $1.67 million and $0.13, respectively. Furthermore, Non-GAAP Adjusted EBITDA increased 41.4% from the prior-year quarter to $3.99 million.
Over the past year, the stock has gained 65.7% to close the last trading session at $5.91. It has also gained 67.9% year-to-date.
LFVN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It is ranked #2 in the Medical – Consumer Goods industry. It has an A grade for Value and Quality and a B grade for Sentiment. To see additional LFVN ratings for Growth, Momentum, and Stability, click here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
FSNUY shares were trading at $7.83 per share on Tuesday morning, up $0.10 (+1.29%). Year-to-date, FSNUY has gained 14.58%, versus a 20.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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