With a growing population and rising rates of chronic conditions, the demand for better healthcare solutions has never been greater. Thus, scooping shares of fundamentally sound healthcare stocks, Johnson & Johnson (JNJ), Pfizer Inc. (PFE), and The Cigna Group (CI), could provide significant gains and long-term stability.

Chronic diseases are becoming more prevalent worldwide, leading to a surge in demand for innovative treatments. As conditions like heart disease, diabetes, and respiratory issues rise, healthcare providers and pharmaceutical companies must meet the increasing need for effective and accessible solutions to manage these ailments.

That said, Artificial intelligence (AI) and machine learning are reshaping the healthcare landscape. By improving task management, patient services, and complex measurements, AI is streamlining operations and accelerating the healthcare industry's growth, making it more efficient and patient centric.

Moreover, the industry continues to demonstrate its potential, as seen with the U.S. Food and Drug Administration’s approval of 38 new drugs for chronic conditions this year. With global pharmaceutical revenue expected to hit $1.45 trillion by 2029, growing at a steady CAGR of 4.7%, the future of healthcare looks promising.

With these conductive trends in mind, let us dive deep into the fundamentals of three healthcare stocks, starting with #3.

Stock #3: Johnson & Johnson (JNJ)

JNJ researches, develops, manufactures, and sells a variety of healthcare products. Its offerings address conditions such as immunology, infectious diseases, neuroscience, oncology, and pulmonary hypertension. The company operates through two segments: Innovative Medicine and MedTech.

On October 10, JNJ announced the launch of the first phase of VOLT™ Variable AngleOptimized Locking Technology Plating System, an innovative system for fracture management solutions. This positions JNJ to strengthen its presence in the orthopedic trauma market, driving market share growth and stable opportunities.

On October 9, JNJ announced the completion of acquisition of V-Wave Ltd., a privately held company focused on developing innovative treatment options for patients with heart failure. The acquisition could allow JNJ to broaden its product offerings and capitalize on emerging opportunities in the growing field of heart disease management.

For the fiscal 2024 third quarter that ended on September 29, JNJ’s sales to customers increased 5.2% year-over-year to $22.47 billion. Its gross profit also grew 5.2% from the year-ago value to $15.51 billion. Additionally, the company’s net earnings and net earnings per share from continuing operations came in at $2.69 billion and $1.11, respectively.

Analysts expect JNJ’s revenue for the fiscal year ending December 2024 to increase 4.3% year-over-year to $88.79 billion. Its EPS for the ongoing fiscal year is expected to grow marginally from the previous year to $9.96. Plus, the company topped the consensus EPS estimates in all four trailing quarters.

JNJ’s stock has increased by 6.1% over the past six months, closing the last trading session at $158.35. The company maintains a 24-month beta of 0.25, reflecting its relatively low market volatility.

JNJ’s POWR Ratings mirror its strong fundamentals. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

JNJ has a B grade for Value, Stability, and Quality. It is ranked #14 out of 160 stocks in the Medical – Pharmaceuticals industry.

To check the stock’s ratings for Growth, Sentiment, and Momentum, click here.

Stock #2: Pfizer Inc. (PFE)

PFE is a global, research-driven biopharmaceutical company that discovers, develops, manufactures, markets, sells, and distributes biopharmaceutical products. It provides medicines and vaccines in therapeutic areas such as cardiovascular metabolic, migraine, and women's health.

On October 22, PFE announced the U.S. Food and Drug Administration (FDA) approval of ABRYSVO, bivalent RSV prefusion F (RSVpreF) vaccine, for the prevention of lower respiratory tract disease (LRTD) caused by RSV in individuals 18 through 59 years of age who are at increased risk for LRTD caused by RSV.

With this approval, the company could expand its footprint in infectious disease prevention, opening doors to new opportunities and solidifying its reputation as a leader in innovative healthcare solutions.

On October 11, PFE announced the FDA approval for HYMPAVZI, a drug for routine prophylaxis to prevent or reduce the frequency of bleeding episodes in adults and pediatric patients 12 years of age and older with hemophilia A without factor VIII inhibitors or hemophilia B without factor IX inhibitors.

The approval strengthens PFE’s position in the rare disease market. As the company broadens its therapeutic offerings, HYMPAVZI provides a vital tool for managing hemophilia, paving the way for increased growth in this specialized area of healthcare.

For the fiscal third quarter that ended on September 29, 2024, PFE’s total revenues increased 31.2% year-over-year to $17.70 billion. The adjusted net income and adjusted earnings per common share attributable to PFE common shareholders stood at $6.05 billion and $1.06, compared to a net loss and loss per share of $968 million and $0.17 in the prior year’s quarter, respectively.

Street expects PFE’s revenue and EPS for the fiscal fourth quarter (ending December 2024) to increase 21.9% and 358% year-over-year to $17.36 billion and $0.46, respectively. Moreover, the company topped the consensus EPS estimates in all four trailing quarters.

PFE’s stock has risen 5.3% over the last nine months, with the latest close at $27.99. The company’s 24-month beta stands at 0.23, highlighting its lessened exposure to market fluctuations.

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

PFE has an A grade for Growth and a B for Value. It is ranked #37 within the Medical – Pharmaceuticals industry.

Click here to access PFE’s ratings for Quality, Momentum, Stability, and Sentiment.

Stock #1: The Cigna Group (CI)

CI offers insurance and related services. Its Evernorth segment provides coordinated and point-solution health services. Meanwhile, the Cigna Healthcare segment delivers medical, pharmacy, behavioral health, dental, and other products, including Medicare plans and international health coverage for individuals and employees.

On January 31, CI announced a definitive agreement for Health Care Service Corporation (HCSC) to acquire its Medicare Advantage, Cigna Supplemental Benefits, Medicare Part D, and CareAllies businesses for an approximate transaction value of $3.7 billion. This would enable CI to unlock substantial value for stakeholders by freeing up resources to accelerate investment in its services platform.

For the fiscal third quarter that ended on September 30, 2024, CI’s adjusted revenues increased 29.8% year-over-year to $63.70 billion. Its adjusted income from operations rose 5% from the year-ago value to $2.11 billion. Moreover, the company’s adjusted income from operations per share rose 10.9% from the prior year’s quarter to $7.51.

The consensus revenue estimate of $62.91 billion for the fiscal fourth quarter (ending December 2024) reflects a year-over-year rise of 23%. Its EPS for the same period is expected to increase 15.4% from the prior year’s period to $7.84. Also, the company topped the consensus revenue and EPS estimates in all four trailing quarters, which is impressive.

CI’s shares have gained 6.3% year-to-date, closing the last trading session at $318.39. The stock holds a 24-month beta of 0.13, indicating its low volatility in comparison to broader market movements.

CI’s POWR Ratings reflect its sound outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

CI has a B grade for Growth, Value, and Sentiment. It has topped the 10-stock A-rated Medical - Health Insurance industry.

To check CI’s Quality, Momentum, and Stability ratings, click here.

What To Do Next?

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JNJ shares were unchanged in premarket trading Wednesday. Year-to-date, JNJ has gained 3.40%, versus a 22.48% rise in the benchmark S&P 500 index during the same period.

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.

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