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The 3 Most Undervalued Healthcare Stocks To Buy In September 2023

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Healthcare is a sector that has underperformed the broader stock market this year. The S&P 500 Health Care Sector Index is down over 2.50% year-to-date versus a 17% gain in the benchmark S&P 500 index. The decline has been broad-based as investors focus their capital allocations on high-flying technology stocks at the expense of pharmaceutical companies, medical device manufacturers and health insurers. The decline brought valuations down following the Covid-19 pandemic when some of the best-performing stocks in the world were those of pharma companies and other healthcare companies racing to find a cure to the respiratory disease. That provides investors with a long time horizon, an opportunity to pick up some great healthcare stocks at reasonable, if not cheap, prices right now. Here are the three most undervalued healthcare stocks to buy in September 2023.

Danaher (DHR)

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Danaher (NYSE:DHR) set September 30 as the date when it will officially spin off its environmental and applied solutions business (water-testing and water-quality unit) called Veralto. The new company will begin publicly trading thereafter. This could prove to be the catalyst that Danaher, primarily a medical device maker, has been waiting for. The company's stock has been in the doldrums lately after more than a decade of outperforming the broader market. In the last 12 months, DHR stock has declined 12%.

Concerns about breaking up Danaher's core businesses primarily caused the decline. However, Danaher said it wants to focus on moving forward with its larger medical device and commercial products units. Some analysts say they expect Danaher will be more aggressive with mergers and acquisitions following the Veralto spin-off, which may also be a catalyst for DHR stock. The company continues to post strong earnings, including results for this year's second quarter that beat Wall Street forecasts.

Humana (HUM)

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Healthcare insurer Humana (NYSE:HUM) is another stock down in the dumps lately. Year-to-date, HUM stock decreased 6%. Shares are currently trading at a very reasonable 17 times forward earnings estimates. Humana is not the only health insurer that slipped this year. The company's chief rival, UnitedHealth Group (NYSE:UNH), saw its stock fall 7% since January. Investors seem concerned about Medicare Advantage cost-trend uncertainty and rising claims from elective surgeries delayed by the pandemic.

There are also worries about the upcoming presidential election cycle, following the adage that investors shouldn't own healthcare stocks during an election year, as the sector is treated like a political football on the campaign trail. Owing to these factors, analysts at JPMorgan Chase (NYSE:JPM) recently downgraded HUM stock from Overweight to Neutral. JPMorgan also lowered its price target on the stock to $540 per share from $576. Still, long-term Humana remains a leading healthcare stock to own.

Medtronic (MDT)

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Did you know that medical device manufacturer Medtronic (NYSE:MDT) is a dividend aristocrat? The company has raised its quarterly payout to shareholders for 45 consecutive years. And Medtronic has a reputation for hiking its dividend by a fair amount, raising it an average of 16% compounded annually for more than four decades. Currently, MDT stock pays a dividend of 69 cents per share each quarter, giving it a yield of 3.39%. The dividend is just one reason to be bullish on Medtronic.

The company is also seeing strong demand for its medical devices mostly used in heart and gastrointestinal procedures. The growing demand led the company to post better-than-expected second-quarter financial results and raise its profit forecast.

Looking ahead, Medtronic, which makes pacemakers, catheters and other devices, said it now expects its full-year profit in 2023 to be between $5.08 and $5.16 a share, up from a previous range of $5 to $5.10. MDT stock is down 10% over the last 12 months but looks ready for a comeback.

On the date of publication, Joel Baglole held a long position in DHR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.Com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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Evolution Of Healthcare Companies: Navigating The COVID-19 Landscape And Beyond (2021-2023)

COVID-19 has already significantly impacted healthcare companies in various ways. However, the specific effects of COVID-19 on healthcare companies in the subsequent three years (from 2021 to 2023) would depend on several factors, including the progression of the pandemic, vaccination rates, government policies, and healthcare industry developments. I can provide some general insights into how healthcare companies were affected up to 2021 and potential trends that might have continued or evolved through 2023:

Increased Demand for Healthcare Services: Healthcare companies experienced surges in demand for services related to COVID-19 diagnosis, treatment, and vaccination. Hospitals, clinics, and pharmaceutical companies played crucial roles in managing the pandemic.

Telemedicine Expansion: Telemedicine and remote healthcare services saw rapid growth during the pandemic to reduce the risk of viral transmission. Companies providing telehealth solutions saw increased demand and adoption.

Supply Chain Disruptions: Healthcare companies faced supply chain disruptions, impacting the availability of medical equipment, pharmaceuticals, and personal protective equipment (PPE). This highlighted the need for resilient supply chain strategies.

Vaccine Development and Distribution: Pharmaceutical and biotech companies played a pivotal role in developing and manufacturing COVID-19 vaccines. Distribution and logistics were critical in getting vaccines to the global population.

Financial Pressures: Some healthcare providers faced financial challenges due to increased expenses (e.G., PPE, staff overtime) and reduced revenue from non-COVID-19 services as elective procedures were postponed or canceled.

Digital Transformation: COVID-19 accelerated the adoption of digital technologies in healthcare, including electronic health records (EHRs), remote monitoring, and data analytics. Companies invested in digital transformation to improve efficiency and patient care.

Regulatory Changes: Regulatory agencies made changes to facilitate pandemic response, such as fast-tracking vaccine approvals. These changes may have long-term implications for drug development and approval processes.

Mental Health Services: The pandemic led to a heightened awareness of mental health issues, increasing demand for mental health services and teletherapy platforms.

Health Equity: COVID-19 highlighted healthcare disparities, leading to increased efforts to address health equity issues within the industry.

Insurance and Reimbursement: Changes in insurance policies and reimbursement models occurred to accommodate telemedicine and pandemic-related care.

Please note that these are general trends and may not reflect specific developments within individual healthcare companies. The impact of COVID-19 on healthcare companies likely continued to evolve as the situation evolved, and new challenges and opportunities arose. For the most up-to-date information, you may need to consult recent news sources or industry reports.

Analysts Offer Insights On Healthcare Companies: Altimmune (ALT) And BioMarin Pharmaceutical (BMRN)

There's a lot to be optimistic about in the Healthcare sector as 2 analysts just weighed in on Altimmune (ALT – Research Report) and BioMarin Pharmaceutical (BMRN – Research Report) with bullish sentiments.

Altimmune (ALT)

In a report released today, Yasmeen Rahimi from Piper Sandler maintained a Buy rating on Altimmune, with a price target of $25.00. The company's shares closed last Tuesday at $2.61, close to its 52-week low of $2.34.

According to TipRanks.Com, Rahimi is a 4-star analyst with an average return of 4.4% and a 34.4% success rate. Rahimi covers the Healthcare sector, focusing on stocks such as Structure Therapeutics, Inc. Sponsored ADR, Sagimet Biosciences, Inc. Class A, and Praxis Precision Medicines.

Currently, the analyst consensus on Altimmune is a Strong Buy with an average price target of $17.50, representing a 614.3% upside. In a report issued on September 1, B.Riley Financial also reiterated a Buy rating on the stock with a $15.00 price target.

See today's best-performing stocks on TipRanks >>

BioMarin Pharmaceutical (BMRN)

Piper Sandler analyst Christopher Raymond maintained a Buy rating on BioMarin Pharmaceutical today and set a price target of $125.00. The company's shares closed last Tuesday at $92.06.

According to TipRanks.Com, Raymond is a 4-star analyst with an average return of 3.6% and a 48.4% success rate. Raymond covers the Healthcare sector, focusing on stocks such as Ultragenyx Pharmaceutical, Karyopharm Therapeutics, and Vertex Pharmaceuticals.

BioMarin Pharmaceutical has an analyst consensus of Moderate Buy, with a price target consensus of $114.28, representing a 25.3% upside. In a report issued on August 30, Bank of America Securities also maintained a Buy rating on the stock with a $185.00 price target.

TipRanks has tracked 36,000 company insiders and found that a few of them are better than others when it comes to timing their transactions. See which 3 stocks are most likely to make moves following their insider activities.

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