2 Highest healthcare stocks defy the bear market
The past seven months have been horrible, horrible, not-so-good, horrible on Wall Street. Most companies feel the effects of macroeconomic headwinds such as inflation and supply chain issues, and few are able to perform well in the marketplace.
Fortunately, there are some companies on the black market this year. Two companies in this group Abvi (ABBV -0.36%) And the Jazz Pharmaceuticals (Jazz -0.55%). Each of these healthcare stocks also offers attractive prospects. Let’s think about why it’s worth buying today.
AbbVie is a stable and distinguished company that can generate increased revenue, profits and profits. Let’s unpack that a little more. First, like its peers in the pharmaceutical industry, AbbVie sells products that consumers can hardly afford to do without. The last thing the average patient wants is to economize on lifesaving medications. That’s why AbbVie can record good revenue and profits even in tough economic conditions.
In the second quarter, AbbVie’s revenue increased 4.5% year over year (YoY) to $14.6 billion. The company’s adjusted earnings per share (EPS) jumped 11.2% year over year to $3.37. The AbbVie portfolio includes many products that are growing at a good rate. The immunology drugs Skyrizi and Rinvoq are among the most promising. Skyrizi’s second-quarter revenue increased 85.9% year-over-year to $1.3 billion.
Rinvoq’s revenue was $592 million, an increase of 56.3% over the prior year quarter. Rinvoq and Skyrizi are on track to replace AbbVie’s crown jewel, the immunosuppressive Humira, which may start facing public competition in the US sometime next year.
Meanwhile, Humira posted sales of $5.4 billion in the quarter — 5.8% higher than the same period last year — despite the continued pressure of general competition in Europe. Cancer drugs Venclexta, Botox Cosmetics, and Botox Therapeutics are some of the other AbbVie perks that are doing decently. Of course, AbbVie boasts dozens of programs in development that should help it maintain a robust portfolio and handle patent ramps as needed.
What about dividends? AbbVie separated from its previous parent company, Abbott Laboratories, in 2013. Counting the time I spent under the Abbott name, AbbVie is the king of earnings, having raised its payouts for 50 consecutive years. AbbVie currently offers an above-average return of 3.96% and a modest cashout rate of 43.5%.
In short, AbbVie can deliver both growth and income. This partly explains why it has outperformed the market this year, and it’s also one that’s worth storing in your wallet for years.
2. Aljaz Pharmaceuticals
Jazz Pharmaceuticals has successfully expanded and diversified its drug portfolio in the past two years, which has helped it improve its prospects. The company’s portfolio now features a rare CBD-based epilepsy drug Epidiolex, which it inherited through an acquisition. Jazz has also achieved significant regulatory victories relatively recently.
These include the daytime drowsiness associated with idiopathic hypersomnia and the narcolepsy treatment Xywav, which first got the go-ahead in mid-2020. This may not sound recent, but Xywav can continue to increase its sales for a while without the risk of public competition. Jazz’s revenue jumped 24% year-over-year in the second quarter to $932.9 million. Adjusted earnings per share increased 10.3% year over year to $4.30.
Xyrem, a treatment for daytime sleepiness in narcolepsy patients and longtime best-selling drug Jazz, continues to generate more sales than any other drug. But other products are making progress.
Xyrem’s revenue for the second quarter was $269.4 million, 19% lower than the same period last year. But this was because patients were taking Xywav instead. Xywav’s sales increased 89% year over year during the quarter, to $235 million. Epidiolex added $175.3 million in revenue, representing a 60% year-over-year increase. The cancer drugs Zepzelca and Rylaze, which are also part of Jazz’s new range of products, also contributed helpfully.
Jazz Pharmaceuticals can continue to grow its revenue and profits thanks to its expanded portfolio of drugs. The company boasts more than a dozen pipeline programs, and is likely to add pointers to some of its existing products and gain approvals for entirely new products. Biotech is in a strong position to continue improving its financial results and delivering strong returns for its shareholders.