Top Healthcare Stocks for May 2023

AZTA, SWAV, and VKTX lead for value, growth, and momentum, respectively

A syringe with a needle is seen in front of the Biontech logo.

Alex Gottschalk / Getty Images

Top healthcare stocks this month include Viking Therapeutics Inc., Cabaletta Bio Inc., and Biomea Fusion Inc., shares of which have soared more than 700% in the last year on promising early data for new therapeutic products.

Healthcare stocks—represented by the Health C

are Select Sector SPDR ETF (XLV), an exchange-traded fund (ETF)—rose 5% over the past year, compared with a 4% increase for the Russell 1000.

Here are the top three healthcare stocks in the following categories: best value, fastest growth, and most momentum. Benchmark data are as of May 10, while company data below are as of May 8.

Best Value Healthcare Stocks

These are the healthcare stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you're paying less for each dollar of profit generated.

Best Value Healthcare Stocks
  Price ($) Market Capitalization (Market Cap) ($B) 12-Month Trailing P/E Ratio
Azenta Inc. (AZTA) 45.59 3.2 1.6
Intercept Pharmaceuticals Inc. (ICPT) 16.16 0.7 2.6
BioNTech SE (BNTX) 108.43 26.1 2.8

Source: YCharts

  • Azenta Inc: Azenta is a life sciences company providing sample and genomic services including drug development, sample and material storage, and clinical trial management. Its customers include pharmaceutical, biotechnology, and life sciences research companies. Azenta shares have fallen by almost 45% in the last year. The company recently announced a business reorganization in an effort to reduce costs.
  • Intercept Pharmaceuticals Inc.: Intercept is a biopharmaceutical company that develops and sells products to treat chronic liver diseases. Intercept shares have lost more than 14% of their value in the last year amid relatively modest revenue gains.
  • BioNTech SE: BioNTech is a German immunotherapy company focused on developing therapies for cancer and other serious diseases. In collaboration with Pfizer Inc., the company developed a vaccine against COVID-19. Shares of BioNTech surged in 2020 and early 2021 during the highly public vaccine development and release, but have since fallen more than 75% from their August 2021 high.

Fastest-Growing Healthcare Stocks

These are the top healthcare stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth.

Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with a quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.

Fastest-Growing Healthcare Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
ShockWave Medical Inc. (SWAV) 288.28 10.5 991.2 71.1
Supernus Pharmaceuticals Inc. (SUPN) 36.71 2.0 975.0 5.2
AstraZeneca PLC (AZN) 75.27 233.3 364.0 -4.5

Source: YCharts

  • ShockWave Medical Inc.: ShockWave makes intravascular devices, balloon dilatation catheters, and other products for patients with cardiovascular disease. ShockWave's revenue increased by nearly three-fourths for the last quarter of 2022, which the company attributed to increased sales of its C2 catheters in the U.S. and greater international reach.
  • Supernus Pharmaceuticals Inc.: Supernus is a pharmaceutical company that develops and sells treatments for central nervous system diseases and disorders, epilepsy, Parkinson's, ADHD, and more. Net earnings increased tenfold to $25 billion in the last quarter of 2022. Sales of Supernus' ADHD drug Qelbree surged 228% from the prior year amid a nationwide Adderall shortage.
  • AstraZeneca PLC: AstraZeneca is a British-Swedish healthcare holding company that, through subsidiaries, researches, manufactures, and markets pharmaceutical products for gastrointestinal, central nervous system, cardiovascular, and other health needs. AstraZeneca's revenue declined in the first quarter of 2023 as sales of its COVID-19 products fell. Nonetheless, EPS quadrupled despite being negatively impacted by costs related to the acquisition of Alexion, restructuring charges, and similar fees.

Healthcare Stocks With the Most Momentum

These are the healthcare stocks that had the highest total return over the past 12 months.

Healthcare Stocks With the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Viking Therapeutics Inc. (VKTX) 22.86 2.3 840.7
Cabaletta Bio Inc. (CABA) 12.58 0.4 798.6
Biomea Fusion Inc. (BMEA) 32.52 1.2 774.2
Russell 1000 Index N/A N/A 3.6
Health Care Select Sector SPDR ETF (XLV) N/A N/A 4.8

Source: YCharts

  • Viking Therapeutics Inc.: Viking is a biopharmaceuticals company that develops products for patients with metabolic and endocrine disorders. The stock jumped 69% in a day in late March after the company reported promising early trial data for an obesity drug.
  • Cabaletta Bio Inc.: Cabaletta is a biotech company that discovers and develops therapies for autoimmune diseases. Shares have risen steadily since October the company said it was pursuing clinical trials of CABA-201 for use in treating autoimmune disorders.
  • Biomea Fusion Inc.: Biomea discovers, develops, and sells treatments for patients with genetically defined cancers. The stock's price nearly doubled in late March after the company reported positive early-stage results in clinical trials of its type 2 diabetes treatment.

Key Trends in Healthcare

The pandemic and technological advances have accelerated several key trends across the healthcare sector that provide potential opportunities for investors, among them telehealth and healthcare wearables.

Telehealth: Telehealth connects patients with health professionals using video calls and health apps. Such services allow people in less-served regional areas or those who can't easily travel to access medical advice in their homes or workplaces.

A survey conducted by the Bipartisan Policy Center showed that 63% of respondents had used telehealth as a preventative service, for a prescription refill, or for a routine visit for a chronic illness. Moreover, eight in 10 surveyed said their primary health issue was resolved and that they would likely use telehealth in the future. Investors can gain exposure to telehealth through stocks including Teladoc Health Inc. (TDOC), Doximity Inc. (DOCS), and American Well Corp. (AMWL).

Healthcare Wearables: Wearable electronic devices allow consumers or patients to wear technology that collects their personal health and fitness data. Healthcare wearables can send a user's health information in real-time to a doctor or other health professional for regular monitoring. 

Some of the more popular healthcare wearable devices are smart health watches, electrocardiogram (ECG) monitors, blood pressure monitors, and biosensors. A survey conducted by Insider Intelligence found U.S. consumers' use of healthcare wearables increased to 33% in 2022 from 9% four years earlier. Key stocks involved in healthcare wearables include Garmin Ltd. (GRMN), Wearable Health Solutions Inc. (WHSI), and Apple Inc. (AAPL).

Advantages of Healthcare Stocks

An aging baby boomer population creating additional demand for medical products and services underpins growth expectations for the healthcare sector. According to the Centers for Medicare and Medicaid Services, U.S. national healthcare expenditure is expected to reach $6.8 trillion by 2030.

A key advantage of the healthcare sector is consistent demand. The overall demand for healthcare products and services is likely to remain steady and to even increase as populations age. This makes healthcare stocks a potential defensive play. At the same time, rapidly developing technologies also provide opportunities for both short- and long-term growth potential in the industry.

Article Sources
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  3. Yahoo! Finance. "Intercept Pharmaceuticals, Inc.'s (NASDAQ:ICPT) Low P/S No Reason For Excitement."

  4. ShockWave Medical Inc. "Shockwave Medical Reports Fourth Quarter and Full Year 2022 Financial Results."

  5. Supernus Pharmaceuticals Inc. "Supernus Announces Fourth Quarter and Full Year 2022 Financial Results."

  6. AstraZeneca PLC. "Q1 2023 Results," Pages 1, 2, 7, 22.

  7. Reuters. "Viking joins obesity drug race after promising early trial data."

  8. Cabaletta Bio. "Cabaletta Bio Announces CABA-201, a Newly Designed CD19 Targeting CAR T Cell Therapy Engineered to Address a Broad Range of Autoimmune Diseases."

  9. Cabaletta Bio Inc. "Cabaletta Bio Receives FDA Fast Track Designation for CABA-201."

  10. Endpoints News. "Biomea Fusion stock soars on early-stage diabetes data."

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  12. Bipartisan Policy Center. "New Survey: Virtual Care Could Keep Low-Acuity Cases Out of Emergency Department."

  13. Insider Intelligence. "The Top Medical Monitoring and Healthcare Wearable Device Trends of 2022."

  14. Centers for Medicare and Medicaid Services. "NHE Projections."

  15. Fidelity. "Opportunities abound in health care stocks."

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