Health care stocks lagged behind the S&P 500 in 2023, but they can often be a solid defensive play in an uncertain economy. People don’t typically reduce their prescription drug purchases or put off procedures or trips to the doctor just because the economy slumps. The Centers for Medicare and 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 2024, according to CFRA Research analysts:
| Stock | Implied upside from Dec. 26 Close |
| Eli Lilly & Co. (ticker: LLY) | 16.5% |
| Merck & Co. Inc. (MRK) | 15.2% |
| Abbott Laboratories (ABT) | 3.5% |
| Amgen Inc. (AMGN) | 3.9% |
| Intuitive Surgical Inc. (ISRG) | 5.2% |
| Medtronic PLC (MDT) | 19.1% |
| Vertex Pharmaceuticals Inc. (VRTX) | 4.7% |
| Regeneron Pharmaceuticals Inc. (REGN) | 7.2% |
| Boston Scientific Corp. (BSX) | 12.5% |
| McKesson Corp. (MCK) | 11.9% |
Eli Lilly & 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 Eli Lilly has several medium- and long-term catalysts ahead, including data on late-stage therapies such as donanemab for Alzheimer’s disease, pirtobrutinib for leukemia and lymphoma and tirzepatide for obesity and cardiology. Eli Lilly reported an impressive 37% year-over-year revenue growth rate in the third quarter, and Hardy says that strength was driven largely by better-than-expected 68% sales growth from antidiabetic drug Mounjaro. CFRA has a “buy” rating and $665 price target for LLY stock, which closed at $570.67 on Dec. 26.
Merck & Co. Inc. (MRK)
Merck is one of the world’s largest pharmaceutical companies. Merck reported 7% revenue growth in the third quarter, including 17% sales growth from leading cancer drug Keytruda. Sales for Merck’s HPV vaccine Gardasil were also up 13%. Hardy says Merck will be better positioned for growth in 2024 following the 2023 acquisition of Prometheus Bioscience. He’s bullish on the company’s cardiology and oncology portfolios and says Merck has opportunities to expand the labels of Keytruda and Lynparza to additional indications. He projects 3.5% revenue growth in 2024. CFRA has a “buy” rating and $124 price target for MRK stock, which closed at $107.63 on Dec. 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 2023, Abbott boosted its quarterly dividend by 7.8% from 51 cents to 55 cents, representing a 2% dividend yield at current levels. The latest hike marked the 52nd consecutive year Abbott investors have enjoyed a dividend increase. Hardy says Abbott’s growing dividend, strong balance sheet and diversified business will help it outperform peers in the long term. CFRA has a “buy” rating and $113 price target for ABT stock, which closed at $109.23 on Dec. 26.
Amgen Inc. (AMGN)
Amgen is one of the world’s largest biotechnology companies. Hardy is bullish on Amgen’s newly commercialized drugs Tezspire for treating severe asthma and Lumakras for treating cancer. He also says the company’s attractive pipeline of drug candidates could create significant future value for investors. Hardy says Amgen’s massive $28 billion acquisition of Horizon Therapeutics in 2023 will give Amgen three best-in-class rare disease drugs in Tepezza, Krystexxa and Uplinza. He estimates the plaque psoriasis market for Amgen’s Amjevita is valued at more than $25 billion. CFRA has a “buy” rating and $295 price target for AMGN stock, which closed at $283.90 on Dec. 26.
Intuitive Surgical Inc. (ISRG)
Intuitive Surgical produces robotic systems used for a range of different surgical procedures. Hardy says Intuitive has a long growth runway ahead, a defensible competitive position and impressive profit margins. In addition, he says the company has one of the best management teams in the industry. Hardy says the COVID-19 pandemic helped accelerate the adoption of robotic surgery systems, and placements of Intuitive’s systems drive many years of recurring sales of accessories and other instruments. Hardy projects 14% revenue growth in 2024, in line with 2023 growth rates. CFRA has a “buy” rating and $355 price target for ISRG stock, which closed at $337.39 on Dec. 26.
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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 businesses as part of its plan to streamline its portfolio and focus on higher-growth sales. Hardy says Medtronic’s innovation and successful new product launches make it stand out among its medical device peer group. Hardy is particularly bullish on the company’s robotic-assisted surgery platform, which he believes will eventually be adopted worldwide. CFRA has a “buy” rating and $98 price target for MDT stock, which closed at $82.30 on Dec. 26.
Vertex Pharmaceuticals Inc. (VRTX)
Vertex Pharmaceuticals is a biopharmaceutical company that specializes in developing therapies to treat cystic fibrosis, or CF. Vertex also owns the rights to 60% of the profits from sales of Crispr Therapeutics AG (CRSP) gene-editing therapy exa-cel, which was approved for commercial launch in treating sickle cell disease by the Food and Drug Administration in December 2023. Hardy says Vertex has a first-mover advantage in the CF market and has potential upside from multiple early and mid-stage clinical programs outside of CF. He is particularly optimistic about potential sickle cell disease cure CTX001. CFRA has a “buy” rating and $427 price target for VRTX stock, which closed at $407.66 on Dec. 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 stock is undervalued at its current price. He says Regeneron has successfully diversified away from relying so heavily on Eylea and can sustain its long-term growth with Dupixent and other drugs. Hardy projects Regeneron will grow its revenue by 4% in 2024. CFRA has a “buy” rating and $911 price target for REGN stock, which closed at $849.53 on Dec. 26.
Boston Scientific Corp. (BSX)
Boston Scientific is a medical device manufacturer that specializes in cardiovascular, rhythm management and medical-surgical equipment. Hardy says the company’s recent product launches and impressive development pipeline suggest Boston Scientific has a long growth runway ahead. He’s particularly optimistic about the Watchman FLX, Exalt-D, POLARx, LUX-Dx, Eluvia and SpyGlass. Boston Scientific shares trade at a valuation discount to peers, but Hardy says the company should outgrow its peer group in coming years. He projects $2.33 in earnings per share and 8% revenue growth in 2024. CFRA has a “buy” rating and $63 price target for BSX stock, which closed at $55.99 on Dec. 26.
McKesson Corp. (MCK)
McKesson is one of the largest distributors of pharmaceuticals and medical-surgical supplies in the U.S. Analyst Daniel Rich says divestments of international assets and an ongoing slowdown in COVID-19-related sales will slow McKesson’s revenue growth in fiscal 2024, but he anticipates McKesson can achieve 14% annual EPS growth from fiscal 2024 through 2027. He is bullish on the company’s exposure to the high-growth biopharma and oncology markets, and he also expects continued support from share buybacks and 6% to 7% annual dividend growth. CFRA has a “buy” rating and $510 price target for MCK stock, which closed at $455.76 on Dec. 26.
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10 Best Health Care Stocks to Buy for 2024 originally appeared on usnews.com
Update 12/27/23: This story was previously published at an earlier date and has been updated with new information.
