The market outlook of the healthcare sector in 2012 looks favorable for making investments. There are many segments within healthcare, such as pharmaceutical manufacturing, research, instrument manufacturing, and also insurance. Choosing a mix of these companies pertaining to varied segments would produce the best investment results. Below, I will discuss five healthcare companies operating within these segments that are taking measures to ensure future growth through cost restructuring, the launch of new drugs like 'Sapien,' and by building strong pipelines in highly specialized markets like sclerosis. I will make recommendations to investors based on my findings.
Edwards Lifesciences (NYSE:EW) engages in the treatment of cardiovascular disease, for which it develops and designs medical equipment on a global platform. Shares are currently trading around $76, between a 52-week range of $62 and $92. With earnings per share of around $2, and price earnings of around $38, Edwards
Lifesciences boasts a market capitalization of around $9 billion. The stock is currently trading approximately 9% over its 20-day moving average, while approximately 16% and 7% above its 50-day and 200-day moving averages, respectively. Edwards Lifesciences has a five-year projected earnings per share of approximately 18%.
Edwards Lifesciences has an operating margin of 18.05%, higher than the industry average of 14.47%. The company has positioned its products optimally in the market to generate more than 70% of its sales by efficient pricing. The company expects an increased growth potential as well as higher revenue generation with the launch of 'Sapien', which was recently approved in the U.S. I recommend buying shares of Edwards Lifesciences at current price levels.
CIGNA (NYSE:CI) is one of the primary healthcare providers in the U.S. Its current market price is around $45, within a 52-week range of $39 and $53. Earnings per share are currently around $5. The market capitalization of CIGNA is around $12 billion. Its price-to-book value per share is $29, while its trailing twelve months earnings per share is $5.50. The company can efficiently carry out any of its capital deployment activities, as it is in a strong capital position to do so. Also, the company's exposure to risk is relatively small, as compared with others in the healthcare industry, as most of its revenues are from service-related engagements based on fees rather than remuneration. In my opinion, the stock presents an excellent entry point for investors at its current price.
Biogen Idec (NASDAQ:BIIB) engages in biotechnology, by providing treatment for cancer, immunology and other like areas of therapeutics. Its current market price is around $119, toward the top of its 52-week range of $66 and $123. It has price earnings of around $24, with earnings per share of $5.04. Biogen Idec has a market capitalization of $28 billion. The company has undergone restructuring in 2010, which would certainly benefit cost savings. By the year 2015, Biogen Idec will be launching five new products, some of which promise to enter the sclerosis market in a big way. The company's pipeline of products does look promising enough for stirring generation of revenue. I recommend purchasing shares of Biogen Idec at current price levels.
Novo-Nordisk (NYSE:NVO) is a leading company engaged in the treatment of diabetes. The current market price of the company is around $138, within its 52-week low and high of $95 and $140, respectively. The company has a fairly good dividend yield of around 1.31%, with its earnings per share of $5. Novo-Nordisk has a market capitalization of nearly $80 billion, with a price earnings of approximately $26. In the last five years, Novo-Nordisk has displayed a growth of nearly 25% per year. Any growth in the healthcare sector would be favorable to this $64 billion dollar company. The company has rendered a total return of approximately 20% per year, over the last 10 years to its investors. With a target price of $200, the stock is currently trading at a multiple of 19. The prime catalyst for Novo-Nordisk to drive its revenue generation is Victoza. Over the next five years, the company has a potential upside of approximately 80%. I recommend buying shares of Novo-Nordisk at current price levels.
Thermo Fisher Scientific (NYSE:TMO) is a leading manufacturing company in the healthcare sector, engaged in providing equipment, precision instruments, and also rendering services pertaining to medical software, biotech and pharmaceutical companies. The current market price of Thermo Fisher Scientific is around $57, trading within its 52-week range of $43 and $66. The Company has a market capitalization of $20.21 billion, whereas its earnings per share and price earnings are $3 and $21, respectively. In 2012, the expected growth in revenue is around 4% to 5%, whereas earnings per share are expected to increase by 14% to 16%. The company enjoys a wide customer base, as well as strong research and development investment initiatives, so as to improve its existing products along with the products in the pipeline. Thermo Fisher Scientific's engagement in the buyback of shares has enhanced the company's liquidity. In my opinion, Thermo Fisher Scientific is an optimal choice for investment at its current market rate.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.