Health care stocks have lagged behind the rest of the market so far this year, but they can be a solid defensive play in an uncertain economy. People don’t typically reduce their prescription drug purchases, put off procedures or cancel trips to the doctor just because the economy slumps. The Centers for Medicare & Medicaid Services estimates U.S. health care spending totaled $4.4 trillion in 2022 and projects it will grow 5.4% annually through 2031, providing excellent long-term investment opportunities.
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Here are 10 of the best health care stocks to buy in 2023, according to CFRA Research analysts:
| Stock | Implied upside from Sept. 26 closing price |
| Eli Lilly and Co. (ticker: LLY) | 15.3% |
| Merck & Co. Inc. (MRK) | 17.7% |
| Pfizer Inc. (PFE) | 32.7% |
| Abbott Laboratories (ABT) | 35.1% |
| Amgen Inc. (AMGN) | 4.1% |
| Medtronic PLC (MDT) | 24.1% |
| Intuitive Surgical Inc. (ISRG) | 35.9% |
| Vertex Pharmaceuticals Inc. (VRTX) | 10.3% |
| Regeneron Pharmaceuticals Inc. (REGN) | 3.9% |
| Boston Scientific Corp. (BSX) | 15.5% |
Eli Lilly and Co. (LLY)
Eli Lilly produces brand-name prescription drugs to treat a wide range of medical conditions, including diabetes, cancer and neurological disorders. Analyst Sel Hardy says he is bullish on several late-stage Eli Lilly therapies, including donanemab for Alzheimer’s disease, pirtobrutinib for leukemia and lymphoma, and tirzepatide for obesity and cardiology. Hardy says upside for Eli Lilly shares hinges on additional growth from the company’s key current drugs coupled with future pipeline development. Eli Lilly’s 28% year-over-year revenue growth in the second quarter was boosted by new antidiabetic drug Mounjaro. CFRA has a “buy” rating and $634 price target for LLY stock, which closed at $550.01 on Sept. 26.
Merck & Co. Inc. (MRK)
Merck is one of the world’s largest pharmaceutical companies. Merck reported 3% year-over-year revenue growth in the second quarter, including 19% sales growth from leading cancer drug Keytruda. Sales for Merck’s HPV vaccine Gardasil were also up 47%. Hardy says the second half of 2023 will be more challenging for Merck, but the company will be better positioned for growth in 2024 and beyond given its recent acquisitions of Prometheus Bioscience and Acceleron Pharma. Hardy says Acceleron will improve Merck’s presence in the growing cardiovascular disease treatment market. CFRA has a “buy” rating and $124 price target for MRK stock, which closed at $105.39 on Sept. 26.
Pfizer Inc. (PFE)
Pfizer is a global biopharmaceutical company that has a diversified portfolio of drug products and an extensive pipeline of candidates. Pfizer projects sales of its Comirnaty COVID-19 vaccine will drop 64% in 2023, while sales of its COVID-19 oral antiviral Paxlovid will drop 58%. In addition, the company has $17 billion in revenue at risk due to loss of patent exclusivity between 2025 and 2030. Fortunately, Hardy estimates that Pfizer has 19 drugs in its development pipeline that can collectively generate $20 billion in revenues by 2030. CFRA has a “buy” rating and $43 price target for PFE stock, which closed at $32.40 on Sept. 26.
Abbott Laboratories (ABT)
Abbott Laboratories is a diversified health care company and a member of an exclusive club called the dividend aristocrats, stocks that have raised their dividends for at least 25 consecutive years. In 2022, Abbott boosted its quarterly dividend by 8.5% from 47 cents per share to 51 cents, for a 2% yield. Last year marked the 51st consecutive year Abbott investors have enjoyed a dividend hike. Analyst Paige Meyer says Abbott’s innovative, diversified business model, strong balance sheet and growing dividend will help the stock outperform its peers. CFRA has a “buy” rating and $130 price target for ABT stock, which closed at $96.23 on Sept. 26.
Amgen Inc. (AMGN)
Amgen is one of the world’s largest biotechnology companies. Hardy says Amgen has an impressive pipeline of drug candidates and newly commercialized drugs, including Tezspire for severe asthma and Lumakras for cancer. He is also bullish on the company’s Amjevita drug targeting the $25 billion plaque psoriasis market, the first commercial competition for Humira following its patent expiration in early 2023. Amgen has guided for mid-single-digit annual revenue growth and at least 9% annual earnings growth through 2030, targets Hardy says are well within reach. CFRA has a “buy” rating and $280 price target for AMGN stock, which closed at $269.04 on Sept. 26.
[READ: AI in Health Care: 8 Best Stocks to Buy]
Medtronic PLC (MDT)
Medtronic is a health care device manufacturer that operates in four segments: cardiovascular, medical surgical, neuroscience and diabetes. The company is planning to spin off its patient monitoring and respiratory interventions business as part of its plan to streamline its portfolio and focus on higher-growth sales. Meyer says global medical procedure volumes continue to recover following the COVID-19 pandemic and subsequent staffing shortages at medical facilities. Meyer says Medtronic has a track record of market share gains driven by innovation and new product launches. CFRA has a “buy” rating and $98 price target for MDT stock, which closed at $78.95 on Sept. 26.
Intuitive Surgical Inc. (ISRG)
Intuitive Surgical produces robotic systems used for a range of different surgical procedures. Meyer says Intuitive has one of the best management teams in the medical device industry, and the company outclasses peers with its attractive margins, growth runway and defensible competitive position. She says the pandemic helped accelerate the adoption of robotic surgery, and Intuitive’s systems generate many years of recurring sales of instruments and accessories. Meyer says the stock has room for earnings multiple expansion at its current valuation, and she projects 15% year-over-year revenue growth in 2023. CFRA has a “buy” rating and $395 price target for ISRG stock, which closed at $290.74 on Sept. 26.
Vertex Pharmaceuticals Inc. (VRTX)
Vertex Pharmaceuticals is a biopharmaceutical company that develops therapies to treat a range of diseases, including cystic fibrosis. Vertex also owns the rights to 60% of the profits from sales of CRISPR Therapeutics AG (CRSP) gene-editing therapy exa-cel, which could potentially be approved for commercial launch by the Food and Drug Administration by the end of 2023. Hardy says Vertex has a first-mover advantage in the cystic fibrosis market and has impressive early and mid-stage clinical programs outside of cystic fibrosis as well. He is particularly optimistic about sickle cell disease treatment CTX001. CFRA has a “buy” rating and $388 price target for VRTX stock, which closed at $351.69 on Sept. 26.
Regeneron Pharmaceuticals Inc. (REGN)
Regeneron Pharmaceuticals is a biotech company focused on developing therapies to treat metabolic disorders, inflammatory diseases, cancer and respiratory conditions. Regeneron shares took a big hit in June after the FDA rejected the high-dose formulation of wet age-related macular degeneration drug Eylea, but Hardy says the weakness is a buying opportunity. Fortunately, the FDA had no issues with Eylea’s safety or efficacy, and the rejection was only related to the drug’s third-party manufacturer. Hardy says Eylea sales will continue to grow, and the high-dose formulation may eventually be approved. CFRA has a “buy” rating and $865 price target for REGN stock, which closed at $832.41 on Sept. 26.
Boston Scientific Corp. (BSX)
Boston Scientific is a medical device manufacturer that specializes in cardiovascular, rhythm management and medical-surgical equipment. Meyer says the company’s pipeline and recently launched products are impressive. She says Watchman FLX, Exalt-D, POLARx, LUX-Dx, Eluvia and SpyGlass should be particularly strong growth drivers for Boston Scientific. Meyer projects peer-leading revenue growth from the company in the next several years, but the stock currently trades at a valuation discount to many of those peers, suggesting significant upside. Meyer projects 10% revenue growth in 2023. CFRA has a “buy” rating and $61 price target for BSX stock, which closed at $52.83 on Sept. 26.
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10 Best Health Care Stocks to Buy for 2023 originally appeared on usnews.com
Update 09/27/23: This story was previously published at an earlier date and has been updated with new information.
