The stock market has given us a bumpy ride since the start of the year. The S&P 500 has slipped 16%. And the Nasdaq has declined 25%. But most clouds have a silver lining. And the silver lining in this dark cloud has to do with price. Many stocks have become too cheap to ignore. For investors, that equals buying opportunities.
There are some great examples in the healthcare sector. I'm talking about a biotech company selling a billion-dollar product, a telemedicine leader with solid growth prospects, and a former biotech giant that's reached an important turning point. Let's take a closer look at each.
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1. Moderna
Moderna (MRNA 1.55%) has reported billions of dollars in revenue and profit every quarter for the past year. That's since it started selling its coronavirus vaccine. The most recent quarter was no exception. Sales soared to $6.1 billion. And profit came in at $3.7 billion. The company expects at least $21 billion in vaccine sales for the full year.
Looking ahead, Moderna has four potential blockbuster products on the horizon. First, there's its coronavirus booster, tailored to better address variants. The company aims to bring that to market this fall. Within the coming two to three years, Moderna's flu vaccine candidate and respiratory syncytial virus (RSV) vaccine candidate could reach the market too. And the company's cytomegalovirus (CMV) vaccine candidate may be close behind. All of this means, if revenue from today's coronavirus vaccine declines (as some investors fear), other major revenue drivers are on the way.
In spite of all of this positive news, Moderna's shares have dropped 46% since the start of the year. And the company is trading for only 4.9 times forward earnings. This is a steal considering Moderna's revenue today and future prospects.
2. Teladoc Health
Teladoc Health (TDOC +0.19%) stock crashed recently after the company took a $6 billion non-cash goodwill impairment charge. The company also cut its annual forecast due to weakness in two key businesses: mental health and chronic care. But those troubles look like temporary ones. For instance, chronic care signups are taking longer than expected because employers are dealing with the coronavirus situation and bringing employees back to offices. So, it's taking them more time to review Teladoc's offer.
Even with these headwinds, Teladoc is growing. The company reported double-digit growth in both revenue and patient visits in the first quarter. And Teladoc still expects mental health business BetterHelp this year to grow in the upper half of its target range -- and chronic care to grow in the low to mid-teens. The general environment is another plus. At a compound annual growth rate of more than 36%, the global telehealth market is expected to reach $787 billion by 2028, according to Grand View Research. And Teladoc is a market leader with a wide array of services to treat the "whole person."
NYSE: TDOC
Key Data Points
Now, let's look at price. Teladoc has declined nearly 80% so far this year. And that leaves the stock trading at 2.2 times sales. That's compared to more than 24 early last year. Teladoc's challenges with BetterHelp and the chronic care business may not be over. And the stock may not recover instantly. But the long-term picture still looks promising.
3. Biogen
Biogen (BIIB 1.81%) is another player that's faced struggles in recent times. The company is cutting most of the commercial infrastructure supporting its controversial Alzheimer's treatment, Aduhelm. Biogen initially expected Aduhelm to be its next big profit driver. Sales of the company's older blockbusters have been on the decline as generics enter the market. But many doctors questioned Aduhelm's efficacy and safety and refused to prescribe it. And the European Union signaled it wouldn't approve the treatment.
All of this sounds negative. But it actually may signal a new chapter for Biogen. The company's CEO Michel Vounatsos is stepping down. And the company announced a plan to drive "renewed revenue growth." Part of the plan involves cutting $500 million in costs annually -- that's in addition to earlier cost cuts of $500 million. So, we're looking at annual cost reduction of $1 billion. At the same time, Biogen is refocusing it pipeline on programs most likely to be successful. And it's ready to drop projects that may weigh it down.
NASDAQ: BIIB
Key Data Points
Today, Biogen trades at 12 times forward earnings estimates. That's compared to more than 15 at the start of the year. Of course, Biogen remains risky right now. It's in a stage of transition. And a lot will depend on the new CEO and the pipeline. It will take time to get back on track. But at this price, Biogen could be a good recovery stock to consider.
