While the stock market volatility continues, day in and day out, not all companies have witnessed declines in their results. In fact, many wonderful businesses are continuing to thrive in the current environment -- and that includes healthcare stocks.
These companies tends to fare better than others in tough times as demand for their products and services is generally not cyclical. If you're looking to add no-brainer healthcare stocks to your portfolio right now, here are two top names you'll want to consider when formulating your list of buys.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX +3.02%) has made a name for itself as a disruptor, targeting underserved markets with patient populations that have historically had significant mortality risks. All of Vertex's currently approved products treat the rare genetic disease cystic fibrosis. While this diagnosis once spelled a death sentence, today many cystic fibrosis patients are not only seeing improved quality of life but are living much longer.
A huge driver of this change in mortality outcomes has been the approval of cystic fibrosis drugs known as CFTR modulators, which are formulated to target the root cause of the genetic illness. Not only are all of Vertex's products CFTR modulators, but they are the only CFTR modulators that have made it to market to date.
Improved mortality outcomes in the cystic fibrosis patient population not only means that Vertex products are working, but as patients are living longer, demand for its products remains consistent. Bear in mind that CFTR modulators aren't a one-off treatment. Patients must take these drugs at least once every day.
NASDAQ: VRTX
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The third quarter alone saw Vertex grow its top and bottom line by 18% and 9%, respectively. Meanwhile, the company also has an impressive arsenal of other rare disease drug candidates in its pipeline.
CEO and President Reshma Kewalramani noted in the third-quarter earnings call that each of its clinical-stage programs "is a first-in-class or best-in-class approach that holds the promise to transform the disease, and each represents a multibillion-dollar opportunity."
A few examples include drug candidates for acute pain, sickle cell disease, beta-thalassemia, and APOL1-mediated kidney disease, as well as a therapy it's developing with Moderna for cystic fibrosis patients who can't take CFTR modulators.
With Vertex Pharmaceuticals' current foothold in an expansive market, and headway that could see it soon emerge in other vastly undertargeted industries, the future for this company and its shareholders could look very bright indeed.
2. Pfizer
Pfizer (PFE +0.31%) has a company history that goes all the way back to 1849, but many investors gained a renewed interest in the company with the onset of the pandemic. The company found itself as one of the front-runners in the fight against COVID-19 and has two of the top-selling products in the world targeting the virus in its arsenal: its vaccine Comirnaty and oral drug Paxlovid. Management has estimated that these two products alone will contribute nearly $60 billion to Pfizer's 2022 revenue.
If you're wondering why shares of the healthcare giant have slipped by about 15% over the trailing 12 months, a large part of this is due to fluctuating investor sentiment as some are concerned about the company's growth trajectory in a post-pandemic world. However, this could be an incredibly short-sighted view of the long-term potential of this stock, which pays a juicy dividend yield of 3.6% right now.
For one, COVID-19 infections may not be where they were a few years ago, but the prevalence of the viral illness lingers. New and existing variants continue to infect populations around the world, signaling a potential long-term need for bivalent, annual boosters.
Beyond this segment, Pfizer has an expansive portfolio of blockbuster products like blood thinner Eliquis, heart disease drug Vyndaqel/Vyndamax, and its Prevnar vaccine franchise, to name a few examples, that are continuing to drive favorable growth outside its stable of COVID-19 products. Looking back over the trailing five-year period, Pfizer's annual revenue and net income have each grown by about 100%.
NYSE: PFE
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However, even more exciting is the future growth story that is already underway for Pfizer, thanks in large part to the considerable revenue and profits it has raked in from its COVID-19 products that have allowed it to fund a series of acquisitions and ramp up its research and development pipeline capabilities.
At the recent JPMorgan Healthcare Conference in San Francisco, CEO Albert Bourla shared a number of promising announcements, of which current and prospective investors should take close note. Bourla emphasized that the company was entering a pivotal phase of growth in the next year and a half, and is targeting anywhere from $70 billion on the low end up to $84 billion on the high end of non-COVID-19 revenues by the year 2030.
Key catalysts for these goals include the 19 expected new product launches Pfizer will be rolling out in the next 18 months, continued acquisitions, and a series of other product launches starting later in 2024. Bear in mind that Pfizer reported $52 billion in revenue in 2019, the year prior to the pandemic.
In short, Pfizer isn't resting on its laurels and is leveraging the windfall of cash its COVID-19 products added to the company's coffers to launch itself into a new, heightened phase of growth. Considering the company's impressive track record, it's no stretch of the imagination to think that the healthcare stock could achieve or surpass its goals, and long-term investors can reap the rewards.
