Which Healthcare Stocks Get Wall Street’s Strong Buy Rating?

The COVID-19 pandemic has made the world realize the importance of investing in healthcare infrastructure and developing treatments for unmet medical needs. Increased focus on healthcare and the defensive nature of the sector during economic challenges bodes well for healthcare and pharmaceutical stocks. With that in mind, we used TipRanks’ stock comparison tool to rank Eli Lilly ( LLY ), Novartis ( NVS ), and Intuitive Surgical ( ISRG ) against each other to find the healthcare stock with a Strong Buy rating. according to analysts.

Eli Lilly (NYSE:LLY)

Shares of pharmaceutical giant Eli Lilly have surged more than 54% this year on strong demand for type 2 diabetes Mounjaro and weight loss drug Zepbound. The company impressed investors with upbeat Q2 results and upgraded its full-year guidance to reflect continued strength in these two treatments.

Notably, Zepbound, which won US FDA (Food and Drug Administration) approval in November 2023, generated sales of $1.24 billion in the second quarter of 2024. Also, Mounjaro’s sales increased by over 215% to $3.09 billion.

Meanwhile, concerns about shortages of these popular drugs are easing as Eli Lilly has invested heavily to ramp up production. Looking ahead, management is bullish on the prospects of its glucagon-like peptide-1 (GLP-1) offerings such as Mounjaro and Zepbound and drugs for cancer, neurological disorders and autoimmune diseases.

Is LLY a good stock to buy now?

Last week, the US FDA removed Eli Lilly’s Mounjaro and Zepbound (both based on tirzepatide) from the shortage list. Following the news, BMO Capital analyst Evan Seigerman reaffirmed a buy rating on LLY stock with a price target of $1,101. The analyst noted that the announcement implies that the combination tirzepatide cannot be produced in “regular or excessive quantities” by firms that sell cheaper versions known as combination drugs.

Overall, he sees this news as another positive sign for Eli Lilly and strengthens the company’s ability to grow its incretin portfolio by ensuring adequate supply for current and future demand for tirzepatide products.

Shares of Eli Lilly earn a Strong Buy consensus rating based on 18 Buys versus two Hold recommendations. LLY stock’s average price target of $1,050.65 implies a potential upside of about 17% from current levels.

See more LLY analyst ratings

Novartis (NYSE:NVS)

Shares of Novartis are up about 13% this year on strong operating performance and a solid product lineup. The company reported better-than-expected second-quarter results with a 9.4% increase in net sales on the strength of heart failure treatment Entresto, arthritis drug Cosentyx and certain other drugs.

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Moreover, the company raised its full-year FY24 profitability guidance. Core operating income growth is expected in the mid- to high-teens, versus the previous outlook of low-double-digit to mid-teens growth. With a focus on four core therapeutic areas – cardiovascular-renal-metabolic, immunology, neuroscience and oncology, the company is confident of achieving its medium-term CAGR (compound annual growth rate) sales target of over 5% at constant currency over period 2023-2028 and offers a core operating income margin of over 40% by 2027.

Looking ahead, Novartis sees a more than $20 billion market opportunity in its radioligand therapies (RLTs), which target cancer cells.

Is Novartis a good stock to buy?

Earlier this month, Bank of America analyst Graham Parry downgraded Novartis shares to Hold from Buy and lowered his price target to CHF 110 from CHF 120 ($130 from $135) to reflect his cautious stance following the performance shares compared to the European pharmaceutical sector from the beginning of 2023. .

The outperformance of NVS stock was driven by a number of positive Phase 3 catalysts, positive consecutive earnings and guidance upgrades. However, the analyst sidelined because of a “quieter catalyst path” in late 2024 and riskier Phase 3 readings expected in 2025.

Overall, Wall Street has a consensus rating of hold on Novartis stock based on six holds versus a buy recommendation. NVS’s average stock price target of $119.08 implies a 4.6% upside from current levels.

See more NVS analyst ratings

Intuitive Surgical (NASDAQ:ISRG)

Intuitive Surgical is the manufacturer of the popular da Vinci surgical systems and is considered a pioneer in the robot-assisted surgery space. Shares of ISRG are up about 40% so far this year, fueled by the company’s solid operating performance and continued demand for its products.

The company reported a 14% increase in its Q2 revenue to $2.01 billion, supported by a 14% increase in the installed base of da Vinci surgical systems to 9,203 systems and a 17% increase in da Vinci procedures . Moreover, the company’s EPS rose more than 25% to $1.78.

Intuitive is scheduled to announce its third-quarter results on October 17. Analysts expect the company’s EPS to rise more than 12% to $1.64.

What is the price target for ISRG stock?

Earlier this month, Evercore analyst Vijay Kumar raised his price target on Intuitive Surgical shares to $475 from $410, but maintained a hold rating on the stock. The analyst noted that utilization in the MedTech space remained positive in Q3, and the investment outlook for the year ahead continues to be healthy.

However, he remains on the sidelines after the recent run in stocks in the MedTech space.

Overall, Intuitive Surgical shares earn a consensus rating of Moderate Buy, based on 13 buy ratings and five hold ratings on TipRanks. At $498.29, ISRG’s average price target on shares implies a potential upside of 5.7% from current levels.

See more ISRG analyst ratings

Conclusion

Among the three healthcare stocks discussed above, Wall Street is very bullish on Eli Lilly’s prospects. Analysts see more upside potential in LLY stock than NVS and ISRG stock. They are confident in the huge growth potential of Eli Lilly’s diabetes and weight loss treatments given the strong demand for these drugs worldwide.

Disclosure