The aging population is proving to be a boon for healthcare stocks tailored to the needs of seniors, such as those involved in pharmaceuticals, medical devices, and healthcare services. For investors, now is an opportune time to scoop up the shares of fundamentally strong companies such as Thermo Fisher Scientific Inc. (TMO), Pfizer Inc. (PFE), and Elevance Health, Inc. (ELV), which are well-positioned to benefit from increased demand for specialized healthcare services and products.

With the global market for elder care services and assistive devices is projected to reach $1.1 trillion by 2029, exhibiting a CAGR of 5.8%, and the World Health Organisation (WHO) forecasting that the proportion of people over the age of 60 will nearly double by 2050, the demand for specialized healthcare is surging.

The U.S. population is rapidly aging due to the large baby boomer cohort and increased life expectancy. The share of people aged 65 and older is set to rise from 17% in 2022 to 21% by 2030 and 23% by 2050. Moreover, the number of those aged 85 and older is expected to triple from 6.5 million to 17.3 million by 2050. That’s equivalent to the current population of New York State.

The focus on advanced medical research and technology has led to breakthroughs that enhance the quality of life for seniors, including improved treatments for chronic conditions, better diagnostic tools, and more effective drugs. As a result, companies producing or providing these specialized healthcare solutions are experiencing consistent growth.

Considering these conducive trends, let’s examine the fundamentals of the above-mentioned stocks in detail:

Thermo Fisher Scientific Inc. (TMO)

TMO is engaged in helping life sciences research, increasing laboratory productivity, and improving patient health through diagnostics and the development and manufacture of life-changing therapies globally. It operates through four segments: Life Sciences Solutions; Analytical Instruments; Specialty Diagnostics; and Laboratory Products and Biopharma Services.

On July 11, the company declared a quarterly dividend of $0.39 per common share, payable on October 15, 2024, to shareholders of record on September 13, 2024. TMO pays an annual dividend of $1.56, which translates to a yield of 0.26% at the current share price. Its four-year average dividend yield is 0.21%.

On July 10, TMO acquired Olink Holding AB (OLK), a leading provider of next-generation proteomics solutions, in a transaction valued at approximately $3.1 billion, net of $96 million in acquired cash. This acquisition will be integrated into TMO’s Life Sciences Solutions segment. This move enhances TMO’s capabilities in the rapidly growing proteomics market, accelerating scientific discoveries and boosting shareholder value.

For the second quarter of 2024, which ended on June 29, TMO’s operating income increased 15.3% year-over-year to $1.82 billion. Its adjusted net income for the quarter amounted to $2.06 billion, representing an increase of 3% from the same period last year, while its adjusted EPS stood at $5.37, up 4.3% year-over-year. Also, the company’s non-GAAP free cash flow grew 32.8% from the year-ago value to $1.67 billion.

Building on this quarter’s momentum and successful acquisition, the company updated its annual guidance 2024. TMO anticipates full-year revenue to range between $42.40 billion and $43.30 billion. It also forecasts adjusted EPS in the range of $21.29 to $22.07, slightly higher than the prior forecast of $21.14 to $22.02.

The consensus revenue estimate of $11.37 billion for the fiscal fourth quarter (ending December 2024) represents a 4.4% increase year-over-year. The consensus EPS estimate of $5.99 for the same quarter indicates a 5.7% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.

Over the past nine months, the stock has surged 24.3%, closing the last trading session at $606.12.

TMO’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

TMO has a B grade for Stability and Sentiment. It is ranked #5 out of 39 stocks in the Medical - Diagnostics/Research industry. Click here to see the additional ratings for TMO (Growth, Value, Momentum, and Quality).

Pfizer Inc. (PFE)

PFE is a global leader in biopharmaceuticals, offering a wide range of medicines and vaccines across several therapeutic areas. Its diverse portfolio spans treatments for cardiovascular conditions, metabolic issues, migraines, women’s health, and infectious diseases, including COVID-19 prevention and treatment. It also explores future mRNA and antiviral therapies and provides biosimilars for chronic immune and inflammatory conditions.

On July 25, PFE received conditional marketing authorization from the European Commission for DURVEQTIX, a gene therapy for severe Hemophilia B in adults, promising a one-time dose to reduce or eliminate bleeding.  

On April 29, PFE and Genmab A/S (GMAB) secured full FDA approval for TIVDAK® under the supplemental Biologics License Application (sBLA) for treating recurrent or metastatic cervical cancer with disease progression after chemotherapy. The management believes this approval represents a major advancement in treating advanced cervical cancer.

The company pays an annual dividend of $1.68 per share, which translates to a yield of 5.81% on the current share price. Its four-year average yield is 4.15%. PFE’s dividend payout has grown at a CAGR of 4.4% over the past five years.

PFE’s revenues for the second quarter (ended June 30, 2024) increased 2.1% year-over-year to $13.28 billion. Its adjusted net income and adjusted EPS attributable stood at $3.40 billion and $0.60, respectively.

The company has updated its fiscal year 2024 financial guidance, increasing its revenue projection to a range of $59.50 billion to $62.50 billion from the previous estimate of $58.50 billion to $61.50 billion. Additionally, it has raised its adjusted EPS guidance to a new range of $2.45 to $2.65, higher than the prior forecast of $2.15 to $2.35.

Analysts expect PFE’s revenue for the fourth quarter (ending December 2024) to grow 26.3% year-over-year to $18 billion, while its EPS for the same period is expected to increase considerably from the prior year to $0.67.

PFE shares have surged 4.1% over the past six months to close the last trading session at $28.90.

PFE’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It also has a B grade for Growth, Value, and Sentiment. Within the Medical - Pharmaceuticals industry, it is ranked #43 out of 157 stocks. Click here to see PFE’s ratings for Momentum, Stability, and Quality.

Elevance Health, Inc. (ELV)

ELV operates as a health benefits company or health insurer in the United States. It operates through four segments: Health Benefits; CarelonRx; Carelon Services; and Corporate & Other. The company supports consumers, families, and communities across the entire care journey, connecting to the care, support, and resources to lead healthier lives.

On July 16, the company announced a quarterly dividend of $1.63 per share, payable on September 25, 2024. With 12 years of consecutive dividend growth, ELV pays an annual dividend of $6.52, which translates to a yield of 1.19% at the prevailing price levels. Its four-year average dividend yield is 1.12%. The company’s dividend payments have grown at a CAGR of 14.4% over the past three years and a 15% CAGR over the past five years.

On April 15, ELV and Clayton, Dubilier & Rice (CD&R) announced a strategic partnership to accelerate innovation in primary care delivery, enhance the healthcare experience, and improve health outcomes. The new payer-agnostic platform is expected to serve nearly one million consumers and expand ELV’s access to advanced primary care across its Commercial, Individual Exchange, Medicaid, and Medicare health plans.

In the fiscal second quarter that ended on June 30, 2024, ELV’s total revenues increased marginally year-over-year to $43.89 billion. The company’s adjusted operating gain amounted to $2.84 billion, up 5.8% year-over-year. Its adjusted net income came in at $2.36 billion, up 9.9% year-over-year, while its adjusted EPS grew 11.9% from the year-ago value to $10.12.

Street expects ELV’s revenue for the fiscal third quarter (ending September 2024) to increase 1.6% year-over-year to $43.16 billion. Its EPS for the same period is expected to register an 8% growth from the prior year, settling at $9.71. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.

Shares of ELV have gained 18.7% over the past year and 13.7% over the past nine months to close the last trading session at $545.96.

It’s no surprise that ELV has an overall rating of B, equating to a Buy in our POWR Ratings system. It has a B grade for Stability. Out of 10 stocks in the A-rated Medical - Health Insurance industry, ELV is ranked #3.

Beyond what is stated above, we’ve also rated ELV for Growth, Value, Momentum, Sentiment, and Quality. Get all ELV ratings here.

What To Do Next?

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TMO shares were trading at $603.88 per share on Monday afternoon, down $2.24 (-0.37%). Year-to-date, TMO has gained 13.92%, versus a 18.50% rise in the benchmark S&P 500 index during the same period.

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.

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