The medical research industry is at the forefront of innovation and can experience significant growth fueled by rising health awareness, an aging population, and technological advancements. Moreover, the healthcare sector tends to be relatively resilient, as the demand for medical products and services remains relatively stable regardless of economic conditions.
Given the backdrop, it could be wise to scoop up the shares of three fundamentally sound stocks, Laboratory Corporation of America Holdings (LH), Qiagen N.V. (QGEN), and Lantheus Holdings, Inc. (LNTH), which seem well positioned to capitalize on the industry’s growth prospects.
The global clinical trials market is expected to achieve a value of $57.76 billion by 2023 and $92.45 billion by 2030, growing at a CAGR of 6.9% from 2023 to 2030. This expansion is primarily attributed to pharmaceutical and biotechnology companies outsourcing Research & Development (R&D) activities.
On top of it, Artificial Intelligence (AI) in the healthcare market is projected to reach a substantial value of $12.22 billion by the year 2030, exhibiting an impressive CAGR of 51.9%, as AI plays a crucial role in efficiently managing patient data, reducing medical errors, and ultimately improving patient outcomes.
Additionally, increased investments in R&D activity by medical technology companies are propelling the market growth of medical devices. In 2022, the global medical devices market reached a value of approximately $577.26 billion and is projected to expand significantly and reach around $850 billion by 2030, growing at a CAGR of 5.5%.
With these factors in mind, the long-term outlook of the medical research industry remains positive, driven by rising demand for innovative medical solutions worldwide and technological advancements. Thus, let us evaluate the fundamentals of the featured stocks in detail:
Laboratory Corporation of America Holdings (LH)
LH operates as a life sciences company that provides vital information to help doctors, hospitals, pharmaceutical companies, researchers, and patients make confident decisions. It operates in two segments: Labcorp Diagnostics; and Labcorp Drug Development. The company offers various tests, such as blood chemistry analyses, urinalyses, blood cell counts, etc.
On May 16, LH revealed its plans to enhance its existing strategic partnership with Providence. The agreement entails LH's acquisition of Providence, Oregon's outreach laboratory business and specific assets in Oregon.
Rajat Mehta, the Senior Vice President of LH, believes that this expansion enables them to enhance healthcare accessibility, offer top-notch diagnostic capabilities, and ensure affordability of services for patients and providers.
In the same month, LH and Jefferson Health formed a strategic agreement to collaborate on academic partnerships, teaching, and advancing cutting-edge testing methodologies.
This partnership would help drive innovation in testing and provide opportunities for mutual growth for both organizations. Further, it would benefit customers by ensuring a seamless transition and high-quality service.
In the fiscal first quarter that ended March 31, 2023, LH’s revenues amounted to $3.78 billion, while its gross profit came in at $974.70 million. During the same period, the company’s net earnings and EPS stood at $213.30 million and $2.41, respectively. Also, its total current assets amounted to $4.69 billion, increasing 1.5% compared to $4.63 billion as of December 31, 2022.
The consensus revenue estimate of $3.77 billion for the second quarter (ending June 30, 2023) represents a marginal increase year-over-year. Additionally, the consensus revenue estimate of $3.80 billion for the third quarter (ending September 2023) indicates a 5.4% improvement from the same period last year.
Its revenue and net income have grown at CAGRs of 8.4% and 46.1% over the past three years, respectively, while its EPS has improved at a CAGR of 50.2% over the same period.
The stock has gained 10.7% over the past nine months to close the last trading session at $236.18.
LH’s POWR Ratings reflect this robust outlook. The stock has an overall B rating, translating to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Stability and Quality. In the 75-stock Medical - Diagnostics/Research industry, it is ranked #9. To see additional ratings of LH for Growth, Value, Momentum, and Sentiment, click here.
Qiagen N.V. (QGEN)
Headquartered in Venlo, the Netherlands, QGEN offers sample-to-insight solutions that transform biological materials into molecular insights worldwide. The company provides primary sample technology consumables, such as nucleic stabilization and purification kits; manual and automated processing; viral and bacterial analysis; silica membranes, and magnetic bead technologies.
On March 9, QGEN announced a strategic partnership with Servier, a global pharmaceutical group, to jointly develop a companion diagnostic test for TIBSOVO®, which is an isocitrate dehydrogenase-1 (IDH1) inhibitor used for treating Acute Myeloid Leukemia (AML).
The aim is to provide a reliable diagnostic tool that can assist in identifying patients who would benefit from TIBSOVO® treatment.
On March 1, QGEN introduced the QIAseq Platform Partnership program and its inaugural partnership with SOPHiA GENETICSTM, a medical data analysis solutions provider. This collaboration aims to combine QIAGEN's QIAseq reagent technology for Next-Generation Sequencing (NGS) with the SOPHiA DDMTM digital analytics platform.
Commenting on this, Thomas Schweins, Senior Vice President of the Life Sciences Business Area at QGEN, said, “Our Platform Partnership Program will enable more customers to benefit from the high quality of the QIAGEN NGS preparation kits through the use of a wider range of analytics solutions to address their unique analysis and interpretation needs.”
For the first quarter that ended March 31, 2023, QGEN’s net sales amounted to $485.39 million, while its gross profit came in at $307.48 million. In the same period, the company’s adjusted net income and adjusted EPS stood at $116.90 million and $0.51, respectively.
Also, its total current liabilities came in at $890.24 million, down 8.6% compared to $974.52 million as of December 31, 2022.
Analysts expect QGEN’s revenue and EPS for the third quarter (ending September 30, 2023) to increase 5.5% and 2.1% year-over-year to $527.58 million and $0.54, respectively. Moreover, it surpassed the revenue and EPS estimates in each of the trailing four quarters, which is excellent.
Its revenue has grown at CAGRs of 8.9% and 6.6% over the past three and five years, respectively. Likewise, it's EBIT and total assets have improved at CAGRs of 13.9% and 6.6% over the past three years, respectively.
Over the past nine months, the stock has gained 10.4% to close the last trading session at $45.21.
QGEN’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.
It has a B grade for Stability and Quality. Within the same industry, it is ranked #7. Click here to see QGEN’s ratings for Growth, Value, Momentum, and Sentiment.
Lantheus Holdings, Inc. (LNTH)
LNTH develops, manufactures, and commercializes diagnostic and therapeutic products that assist clinicians in diagnosing and treating heart, cancer, and other diseases worldwide. Its product portfolio includes DEFINITY, TechneLite, AZEDRA, Neurolite, RELISTOR, PYLARIFY AI, etc.
On April 24, LNTH and POINT Biopharma Global, Inc. (PNT) jointly announced that the U.S. Food and Drug Administration (FDA) had granted Fast Track designation for 177Lu-PNT2002, a treatment for metastatic castration-resistant prostate cancer (mCRPC).
This therapy shows promising potential for treating mCRPC, and the Fast Track designation will facilitate its development and regulatory evaluation.
On February 6, LNTH announced the acquisition of Cerveau Technologies, Inc. This acquisition diversifies LNTH's radiopharmaceutical diagnostic imaging agent pipeline by incorporating MK-6240, the leading Tau PET imaging agent used in Alzheimer's disease.
Additionally, the acquisition grants LNTH access to a wide range of academic collaborations and pharmaceutical partnerships, further strengthening its position in the industry.
LNTH’s revenue increased 43.9% year-over-year to $300.78 million for the first quarter (ended March 31, 2023), while its gross profit came in at $77.08 million. The company’s adjusted net income amounted to $102.16 million and $1.47 per share, representing increases of 50.6% and 51.5% from the prior-year quarter, respectively.
Street expects LNTH’s revenue and EPS for the second quarter (ending June 30, 2023) to increase 37.1% and 47.5% year-over-year to $306.74 million and $1.31, respectively. The company has an excellent earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters.
Additionally, LNTH’s revenue and EBITDA have grown at CAGRs of 42.9% and 32.8% over the past three years, respectively. Also, its EBIT and total assets have increased at CAGRs of 25.5% and 49.5% over the same period, respectively.
LNTH’s shares have gained 70.8% over the past six months and 69.7% year-to-date to close the last trading session at $86.48.
It’s no surprise that LNTH has an overall rating of B, which equates to Buy in our proprietary rating system. It has a B grade for Growth, Sentiment, and Quality. In the same industry, it is ranked #6.
In addition to the POWR Ratings we’ve stated above, we also have LNTH’s ratings for Value, Momentum, and Stability. Get all LNTH ratings here.
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LH shares were trading at $233.97 per share on Tuesday morning, down $2.21 (-0.94%). Year-to-date, LH has declined -0.02%, versus a 14.08% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Mukherjee
Anushka's ultimate aim is to equip investors with essential knowledge that empowers them to make well-informed investment choices and attain sustained financial prosperity in the long run.
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