The new year is here, and for many, it's a fresh opportunity to set financial goals and find fresh stocks to consider adding to a portfolio. The types of stocks you gravitate toward will broadly be informed by your personal risk tolerance levels and interests. Healthcare is one particularly resilient industry to consider as you build out your basket of stocks this year.
Given the wealth of life-saving medicines, medical devices, and other products that healthcare companies produce in mass for a global consumer base, this industry tends to be far more resistant to periods of economic volatility than other spaces. If you're looking to put cash into promising healthcare stocks this month, here are two solid names to consider when you do.
1. Pfizer
Pfizer(NYSE: PFE) has gone through a series of monumental changes over the last several years. Now that the feverish need for COVID-19 vaccines and therapies has dwindled compared to even a few years ago, Pfizer is entering another growth phase that has left some investors nonplussed. Shares traded down roughly 40% over the trailing 12 months. From becoming the world's largest producer of penicillin during World War II to its current status as one of the world's largest pharmaceutical companies with revenue streams that span disease areas from oncology to immunology, this is a company that has evolved many times through the years.
And while Pfizer may not be able to habitually clock $100 billion revenue years moving forward as it did in 2022, there are plenty of green flags for this mature business moving forward that investors shouldn't overlook. Pfizer has used the capital gleaned from its considerable sales of COVID-19 products to fuel a running streak of acquisitions. Some acquisitions of note over the last few years include Seagen, a biotech company that makes cancer drugs, Arena Pharmaceuticals, a company that makes therapies for immuno-inflammatory diseases, Biohaven Pharmaceuticals, which is known for its migraine therapies like Nurtec, and Global Blood Therapeutics, which focuses on treatments for sickle cell disease.
Both thanks to a lightning streak of acquisitions and its own internal R&D efforts, Pfizer is in an 18-month period in which it plans to launch 19 new product approvals or expansions. The end goal is anywhere from $70 billion to $84 billion in annual revenue that doesn't include COVID-19 products by the year 2030. These 19 launches alone are set to bring in $20 billion in revenue by 2030. That goal would help Pfizer balance the loss of COVID-19 revenue and the $17 billion revenue hit from the loss of patent exclusivity on several core products that are expected in the coming years. Pfizer is also working on a multibillion-dollar cost-cutting campaign, a part of which will derive from workforce restructuring efforts and facility closures.
While revenue was down sharply year over year in Q3, Pfizer still brought in revenue of $13 billion, and its non-COVID-19 revenue rose 10% from the year-ago period. The fruits of its product launches will take time to have an effect, but the company has plenty of mainstay products driving growth, like its cancer drugs Ibrance and Xtandi, whose key patents don't expire for several years and which brought in combined revenues of $1.5 billion in the third quarter of 2023.
Pfizer launched seven new products in 2023, which is more approvals than any other pharma company garnered last year. On a final note, this is a business that has been paying a quarterly dividend for 85 years and counting. Given the stock's volatility in recent months, the current yield is around 6%, making now a great time to buy in if you are convinced that the stock is worth it. Patient investors might find a lot to like about this stock in the coming years because the growth story looks far from over.
2. Jazz Pharmaceuticals
Jazz Pharmaceuticals(NASDAQ: JAZZ) is not as well-known a name as Pfizer and this biopharmaceutical company is in a much earlier stage of its growth story. While Pfizer has close to two centuries in business under its belt, Jazz Pharmaceuticals has around 20.
The company is known for several core products that span both oncology and neurological disease concerns. One of the most notable is its cannabidiol (CBD) drug Epidiolex (marketed as Epidyolex outside of North America), which treats seizures associated with multiple forms of epilepsy. Other key products of note include narcolepsy drugs Xyrem and its lower-sodium formulation, Xywav.
Of Jazz Pharmaceuticals' $972 million in revenue in the third quarter of 2023, roughly 60% of that total was attributable to sales of Xywav, Xyrem, and Epidiolex/Epidyolex. Jazz Pharmaceuticals also boasts key revenue drivers like Rylaze (marketed as Enrylaze outside North America), which is for patients with lymphoblastic leukemia and lymphoblastic lymphoma, and Zepzelca, which treats patients with small cell lung cancer. On the whole, Jazz Pharmaceuticals pulled in close to $3 billion in revenue in the first nine months of 2023 alone.
Oncology continues to be a key area of focus for this business. The company is getting ready to submit its biologics license application to the U.S. Food and Drug Administration, seeking accelerated approval for a candidate called zanidatamab as a second-line therapy for biliary tract cancer. Jazz Pharmaceuticals plans to seek multiple additional indications for the candidate in the future, which is being studied as a treatment for multiple HER2-expressing cancers including gastroesophageal adenocarcinoma, metastatic breast cancer, colorectal cancer, and non-small cell lung cancer. HER2 is a protein that influences cell growth. Excess HER2 levels can lead to the development of malignant tumors.
Jazz Pharmaceuticals hasn't been particularly well-loved by investors of late, but analysts on Wall Street think the stock could hit a median 12-month price target that represents about 55% upside from its current price. Even the low forecast gives the stock a 13% 12-month upside, which is slightly above the broader return of the stock market in an average year. Regardless of how the stock fluctuates in the coming months, the business boasts a compelling lineup of products, and its pipeline looks very promising. Investors might want to scoop up even a modest slice of the action.
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Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.
