A new month has arrived. Investors now have a fresh opportunity to buy great stocks. Three Motley Fool contributors believe they've found no-brainer healthcare stocks to buy in June. Here's why they like Amgen (AMGN 0.43%), Vertex Pharmaceuticals (VRTX 0.31%), and Summit Therapeutics (SMMT 16.28%).
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Amgen is a dividend stock with a ton of upside
David Jagielski (Amgen): One of the best healthcare stocks to buy in June is Amgen. Although it's been doing poorly over the past 12 months, dropping 11% of its value over that stretch, the stock has the potential to be an excellent buy in the long run. Not only does it offer a fairly high dividend yield of 3.5%, but its growth prospects are also encouraging.
It has a vast pipeline of projects, with dozens of clinical trials currently ongoing. A key one for investors to watch for is a phase 3 trial it recently initiated on MariTide, its GLP-1 treatment, which needs to be taken only once per month (versus weekly, as with other GLP-1 injectables). It has helped people achieve up to 20% weight loss after taking it for a year -- without any plateau, suggesting more weight loss may be attainable.
Amgen already has many fast-growing assets in its portfolio today, which achieved more than 25% revenue growth in the company's most recent quarter (which ended on March 31), including cholesterol drug Repatha and osteoporosis medication Evenity. Overall, the company's product sales totaled $7.9 billion for the period and rose by 11% year over year.
The stock currently trades at around 25 times its trailing earnings, which is modest given Amgen's long-term potential. For investors, this can be a no-brainer stock to buy and hold for years.
Buy the dip on this top growth stock
Prosper Junior Bakiny (Vertex Pharmaceuticals): Though shares of Vertex Pharmaceuticals, a leading biotech company, are up by 10% this year, the stock is down significantly over the past few weeks. The drugmaker's first-quarter update was not to investors' liking. The company announced worse-than-expected results and is facing a clinical setback with its decision to pause a phase 1/2 clinical trial for VX-522, an investigational therapy for cystic fibrosis (CF), because of potential tolerability issues.
However, none of that changes Vertex's prospects. The not-so-good financial results were partly due to a one-time impairment charge related to an investigational type 1 diabetes (T1D) therapy, VX-264, which the company discontinued. The company's other T1D candidate, VX-880, is still going strong and should hit regulators' desks next year, seeking approval. Vertex also dealt with illegal copies of its CF medicines in Russia, an issue it could resolve by appealing to the legal system.
While the future of VX-522 is now uncertain, Vertex remains the only company that markets therapies addressing the underlying causes of CF. It has encountered clinical setbacks in this field before, but it has continued to develop newer and better medicines. It should do so again regardless of what happens to VX-522.
Meanwhile, there are still plenty of opportunities for Vertex Pharmaceuticals in its core CF area, and it has a couple of newer products that should help drive growth. Elsewhere, the company's pipeline features several exciting candidates beyond VX-880. In short, the company may be down over the past month or so, but it remains a no-brainer stock to buy and hold for a while.
A rising biopharmaceutical star
Keith Speights (Summit Therapeutics): Clinical-stage biotech stocks can be highly risky. However, I think the risk-reward proposition for Summit Therapeutics looks very attractive. The company is a rising biopharmaceutical star with a promising lead pipeline candidate, ivonescimab.
Summit's China-based partner, Akeso, has already won regulatory approvals in its home market for ivonescimab as a monotherapy and in combination with chemotherapy in treating non-small cell lung cancer (NSCLC). I think Akeso's clinical and regulatory success bodes well for Summit's chances of bringing ivonescimab to market in the U.S., Canada, Europe, Japan, Latin America, the Middle East, and Africa.
A major milestone toward that goal could be right around the corner. In mid-2025, Summit plans to announce results from its late-stage clinical study evaluating ivonescimab in combination with chemotherapy as a second-line treatment for NSCLC. The company is also conducting two other phase 3 clinical trials of ivonescimab, one in combination with chemo in first-line NSCLC and the other as a monotherapy for first-line treatment of NSCLC.
You might think Summit's market cap of nearly $20 billion looks ridiculously high for a drugmaker with no approved products yet. It's important to know, though, that ivonescimab beat Merck's Keytruda in a head-to-head phase 3 study conducted by Akeso. Keytruda raked in nearly $29.5 billion last year. If ivonescimab achieves its potential (and I suspect it will), Summit should be worth a lot more than $20 billion in the future.
