From novel pharmaceuticals to telemedicine, most healthcare companies are on a mission to drive better patient outcomes. But financial performance has lagged recently as players offloaded surplus COVID inventories in 2023 and 2024, a headwind for overall demand. The result? Over the past six months, the industry has tumbled by 6.2%. This drop is a stark contrast from the S&P 500’s 6.4% gain.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. On that note, here is one resilient healthcare stock at the top of our wish list and two we’re swiping left on.
Two Healthcare Stocks to Sell:
UFP Technologies (UFPT)
Market Cap: $1.69 billion
With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies (NASDAQ: UFPT) designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.
Why Does UFPT Worry Us?
- Modest revenue base of $588.6 million gives it less fixed cost leverage and fewer distribution channels than larger companies
UFP Technologies’s stock price of $219 implies a valuation ratio of 22x forward P/E. Check out our free in-depth research report to learn more about why UFPT doesn’t pass our bar.
Brookdale (BKD)
Market Cap: $1.74 billion
With a network of over 650 communities serving approximately 59,000 residents across 41 states, Brookdale Senior Living (NYSE: BKD) operates senior living communities across the United States, offering independent living, assisted living, memory care, and continuing care retirement communities.
Why Are We Cautious About BKD?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.8% annually over the last five years
- Underwhelming -0.5% return on capital reflects management’s difficulties in finding profitable growth opportunities
- 12× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Brookdale is trading at $7.32 per share, or 3.8x forward EV-to-EBITDA. If you’re considering BKD for your portfolio, see our FREE research report to learn more.
One Healthcare Stock to Buy:
Natera (NTRA)
Market Cap: $22.23 billion
Founded in 2003 as Gene Security Network before rebranding in 2012, Natera (NASDAQ: NTRA) develops and commercializes genetic tests for prenatal screening, cancer detection, and organ transplant monitoring using its proprietary cell-free DNA technology.
Why Are We Backing NTRA?
- Tests Processed averaged 21% growth over the past two years and imply healthy demand for its products
- Adjusted operating profits and efficiency rose over the last two years as it benefited from some fixed cost leverage
- Free cash flow margin is now positive, showing the company has crossed a key inflection point
At $159 per share, Natera trades at 10x forward price-to-sales. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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