Given the growing healthcare expenditure globally due to the rising aging population and growing prevalence of chronic and rare diseases, coupled with innovative solutions, the healthcare industry is positioned for continued growth and expansion. Also, advanced technologies like AI and IoT are transforming the market.
Given the industry's rosy prospects, it could be wise to invest in fundamentally strong healthcare stocks ACADIA Pharmaceuticals Inc. (ACAD), Harvard Bioscience, Inc. (HBIO), and LAVA Therapeutics N.V. (LVTX) poised for significant upside.
Healthcare spending in the U.S. is expected to grow by 5% between 2023 and 2024, reaching $4.90 trillion.
The healthcare market is transforming with constantly evolving government regulations and policies, innovative solutions, and rapid technological advancements paving new directions for the industry. Emerging healthcare technologies like artificial intelligence, IoT, and blockchain offer advantages for both patients and practitioners by lowering costs and increasing efficiency.
As per Statista, revenue in the pharmaceuticals market is projected to hit $1.15 trillion in 2024. In global comparison, the highest revenue will be generated in the U.S. owing to advanced healthcare infrastructure and strong R&D capabilities of nearly $630.30 billion. The global pharmaceuticals market revenue is anticipated to increase at a CAGR of 4.7%, reaching $1.45 trillion by 2029.
Further, the global AI in healthcare market is estimated to value $148.40 billion by 2029, expanding at a CAGR of 48.1% driven by the need to reduce costs, increasing partnerships and collaborations among healthcare companies, and the growing demand for improvised healthcare services.
Moreover, investors’ interest in the healthcare industry is evident from SPDR Select Sector Fund - Health Care (XLV) 20.7% return over the past year.
Given the industry’s bright prospects, healthcare stocks like ACAD, HBIO, and LVTX look poised to soar.
Let’s discuss the fundamentals of these stocks in detail:
ACADIA Pharmaceuticals Inc. (ACAD)
ACAD is a biopharmaceutical company focused on the development and commercialization of innovative medicines that address unmet medical needs in central nervous system (CNS) disorders and rare diseases.
On July 18, ACAD reported the published results from the journal Med regarding the two open-label extension studies, LILAC-1™ and LILAC-2™, which showed that patients treated with DAYBUE™ who completed these studies experienced improvement in Rett symptoms as measured by the Rett Syndrome Behaviour Questionnaire.
For the second quarter that ended June 30, 2024, ACAD’s total revenues increased 46.4% year-over-year to $241.96 million. Its income from operations rose 902.2% from the year-ago value to $30.44 million. The company’s net income and EPS came in at $33.39 million and $0.20, up 2897.2% and 1900% from the prior year’s quarter, respectively.
In addition, the company’s cash, cash equivalents, and investment securities were $500.94 million as of June 30, 2024, compared to $438.86 million as of December 31, 2023.
Street expects ACAD’s revenue for the fiscal year ending December 2025 to increase 11.4% year-over-year to $1.06 billion. Its EPS for fiscal 2025 is expected to rise 56.1% year-over-year to $0.85. Also, the company topped the consensus revenue and EPS estimates in three of the trailing four quarters.
Shares of ACAD have declined marginally over the past month to close the last trading session at $15.84. The average analyst price target of $26.93 indicates a 70% upside potential.
ACAD’s robust growth prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has an A grade for Growth, Value, and Quality. Within the Medical - Pharmaceuticals industry, ACAD is ranked #15 out of 157 stocks.
Click here to access additional ratings of ACAD for Sentiment, Stability, and Momentum.
Harvard Bioscience, Inc. (HBIO)
HBIO develops, manufactures, and sells technologies, products, and services for life science applications internationally. It offers cellular and molecular technology products, electroporation and electrofusion instruments, amino acid analyzers, spectrophotometers, and other equipment for molecular-level testing and research.
During the second quarter, HBIO launched its latest product innovations. These included the DSI™ Ponemah™ data management platform, which provides an integrated preclinical solutions. It also launched SoHo™ implantable real-time telemetry for small animal models, VivaMARS™, which is an activity monitoring system.
The new solutions for CROs, pharma, and biotech streamline testing and enable fundamental advancements in preclinical and organoid-focused therapy development.
HBIO reported revenues of $23.10 million during the second quarter that ended June 30, 2024, and its gross profit was $13.22 million. The company's adjusted operating stood at $818 thousand for the quarter. The company’s cash and cash equivalents and total assets came in at $4.05 million and $128.91 million as of June 30, 2024.
Analysts expect HBIO's revenue for the fiscal year (ending December 2025) to increase 9.3% year-over-year to $106.85 million, and its EPS for the same year is expected to grow 100% year-over-year to $0.15.
HBIO's shares have plunged 10.9% over the past month to close the last trading session at $2.70. Wall Street analysts expect the stock to hit $6.25 in the near term, indicating a potential upside of 131.5%.
HBIO's sound fundamentals are reflected in its POWR Ratings. The stock has a B grade for Value. Within the Medical – Diagnostics/Research industry, HBIO is ranked #20 among the 39 stocks.
In addition to the POWR Ratings we've stated above, we also have HBIO ratings for Quality, Growth, Momentum, Stability, and Sentiment. Get all HBIO ratings here.
LAVA Therapeutics N.V. (LVTX)
Headquartered in Utrecht, Netherlands, LVTX is a clinical-stage immuno-oncology company that focuses on developing cancer treatments. The company, through its Gammabody platform, develops a portfolio of novel bispecific antibodies to engage and leverage the potency and precision of gamma delta T cells to elicit an anti-tumor immune response and enhance outcomes for cancer patients.
During the second quarter, LVTX reported continued progress in Phase 1/2a dose escalation for LAVA-1207, including the monotherapy arm, now enrolling in dose level 12, and the pembrolizumab combination. It also mentioned the safety profile for LAVA-1207.
During the six months, which ended June 30, 2024, LVTX’s revenue from contracts with customers increased 9.9% year-over-year to $6.99 million. Its gross profit grew 129.6% from the year-ago value to $6.99 million. The company's total non-operating income came in at $2.62 million, reflecting growth of 327.8% year-over-year.
Furthermore, the company’s cash and cash equivalents and total assets stood at $35.09 million and $92.28 million as of June 30, 2024.
LVTX's stock has soared 11.2% over the past year to close the last trading session at $1.69. Wall Street analysts expect the stock to hit $6 in the near term, indicating a potential upside of 255%.
LVTX's POWR Ratings reflect its robust outlook. LVTX has an A grade for Sentiment. It also has a B grade for Value. It is ranked #73 among the 335 stocks in the Biotech industry.
Click here to access additional LVTX ratings for Growth, Stability, Quality, and Momentum.
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.
ACAD shares were trading at $15.35 per share on Wednesday afternoon, down $0.49 (-3.09%). Year-to-date, ACAD has declined -50.97%, versus a 21.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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