HomeBusiness3 Healthcare Stocks That Have Outperformed Nvidia Since 2022

3 Healthcare Stocks That Have Outperformed Nvidia Since 2022

Tech giant Nvidia has been one of the hottest stocks in recent years, with its price more than doubling since 2022. But technology isn’t the only place where investors can find excellent investments.

In fact, there are three healthcare stocks that have outperformed Nvidia since 2022 TransMedics Group (NASDAQ:TMDX), Eli Lilly (NYSE: LLY)And Verona Pharma (NASDAQ: VRNA). Here’s a look at how well these stocks have performed, why they’ve done so well, and whether they’re still a good buy today.

1. TransMedics group: 369%

TransMedics is a fairly small medical device company with a market cap of $2.5 billion. The company has developed an organ care platform that has received Food and Drug Administration (FDA) approval; it can transport multiple organs. It is the only multi-agency platform that regulators have approved. It can improve patient outcomes and be a game changer for the company.

The company has made significant progress in growing its revenue over the years, and TransMedics continues to generate impressive numbers. On Monday, the company reported its fourth-quarter 2023 results, and revenue totaled $81.2 million, up 159% year over year. TransMedics also posted a profit of $4 million. For 2024, TransMedics expects full-year revenue to grow approximately 50%, totaling between $360 million and $370 million.

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With much more growth on the horizon, it may not be too late to invest in healthcare stocks despite their already impressive gains.

2. Eli Lilly: 183%

Eli Lilly has become the world’s largest healthcare stock after nearly tripling in value since 2022. The main reason for the recent success is tirzepatide, the active ingredient in both Mounjaro, the diabetes drug, and Zepbound, the approved weight loss treatment. In clinical trials, tirzepatide has helped people lose as much as 26.6% of their body weight when patients made significant lifestyle changes while also taking the drug.

The hype surrounding anti-obesity treatments has been the catalyst behind the rally in recent years, as Eli Lilly truly has a gamechanger on its hands. Analysts believe that tirzepatide could generate at least $68 billion in annual revenue at its peak. How high that number will ultimately be depends on the other indications for which it can be approved. In clinical trials, tirzepatide has helped treat fatty liver disease, and similar medications have been linked to helping reduce cardiovascular risk in obese people.

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There could be a lot more upside for Eli Lilly stock simply because of the opportunity for tirzepatide. Although the stock looks expensive and is trading at over 100 times earnings, this doesn’t mean it has peaked; Eli Lilly could be the first healthcare stock to reach a $1 trillion valuation.

3. Verona Pharma: 156%

Pharmaceutical company Verona Pharma rounds out this list with gains of 156% since 2022. It’s the riskiest stock on this list because it doesn’t have an approved product yet, but it’s close to the finish with ensifentrine. The FDA is currently reviewing the company’s application for the treatment of chronic obstructive pulmonary disease, and a PDUFA date has been set for June 26.

The $1.4 billion stock could get a lot more headroom if regulators greenlight the drug, as it could become a blockbuster, with analysts predicting it could bring in $1.5 billion in annual revenue at its peak.

However, without approval, Verona will continue to make losses and burn cash because it won’t have an approved product to rely on for consistent revenue. But with ensifentrine showing encouraging results in clinical trials, there is hope that approval will happen this year.

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However, if you don’t agree with taking on significant risk, you might be better off waiting on the sidelines with Verona Pharma shares because that’s by no means a sure thing; If regulators push back on the treatment and ultimately don’t approve it, it could lead to a sharp sell-off.

Should You Invest $1,000 in Eli Lilly Right Now?

Before you buy shares in Eli Lilly, consider the following:

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in Nvidia and TransMedics Group. The Motley Fool has a disclosure policy.

3 Healthcare Stocks That Have Outperformed Nvidia Since 2022 Originally published by The Motley Fool

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