Healthcare stocks trudged through what was a terrible 2023 for the sector. While the S&P 500 rose by 24% during 2023, the healthcare sector managed paltry returns of 0.3%.
Yet, hope springs eternal, particularly within the stock market, and investors are increasingly vocalizing their expectations for a 2024 rebound. Share prices throughout the sector remain muted, providing many targets for those hoping to capitalize on what they see as overly low valuations.
Bargain hunters will have many choices throughout the healthcare sector in 2024. Let’s consider three healthcare stocks at 52-week lows and whether they warrant purchasing or are better left alone.
Pfizer (PFE)
Pfizer (NYSE:PFE) stock will continue to get lots of attention in 2024 due to its discounted price. That’s nothing new: Shares received a lot of attention throughout 2023 for the same reason.
The narrative around Pfizer is very simple: It hit the jackpot by developing Paxlovid and Comirnaty as successful COVID-19 therapeutics. Windfall profits resulted in strong results in those years. However, those revenues cannot be sustained with the resumption of normal life.
So, now, Pfizer sits on the other side of that roller coaster with its shares trading for under $30.
It’s also arguable, though, that Pfizer offers a lot in the way of optimism. The current consensus earnings estimate for the coming year is 46% higher than a year ago. That alone creates room for optimism.
The company will soon report its fourth-quarter results, which probably won’t serve to immediately bolster share prices. Instead, they will reflect what everyone already knows — Pfizer’s sales in 2023 fell off substantially. That was expected and now is the time for optimism, especially considering the company’s deep pipeline it expects to bring online in the next year.
Ginkgo Bioworks (DNA)
Ginkgo Bioworks (NYSE:DNA) is an excellent stock to discuss after Pfizer. The two companies are closely linked and cooperating to develop commercializable programs.
During Q3 Ginkgo Bioworks inked a deal with Pfizer for collaboration and commercial milestone payments valued at as much as $331 million. Pfizer will leverage Ginkgo Bioworks’ proprietary RNA technology for drug discovery. The program is one of many at the company commercializing a platform for cell programming.
Ultimately, DNA aspires to make the field of cell programming as commonplace as the coding, which is done with computers.
The company isn’t perfect, though, by any means. During the third quarter, revenues fell to $55 million from $66 million a year prior — not great. However, 2024 is going to be marked by lower lending rates, which will serve to bolster the economy overall. That will renew optimism around high-potential companies like Ginkgo Bioworks, making it a reasonable consideration for investors.
Bristol-Myers Squibb (BMY)
Bristol-Myers Squibb (NYSE:BMY) saw its stock fall by almost 30% throughout 2023. Many investors continue to believe it is one of the healthcare stocks to watch for its rebound potential in 2024.
My colleague Josh Enomoto recently highlighted Bristol-Myers Squibb for exactly that reason. He was quick to note that one of the company’s problems in 2023 related to its competition with Cytokinetics (NASDAQ:CYTK). The latter reported positive late-stage clinical trial data for its heart failure drug, which pressured BMY shares.
One of the biggest positives about the company’s stock is that it has very low volatility. BMY shares bear a beta of 0.34, denoting stability. Importantly Bristol-Myers Squibb also includes a dividend, which currently yields 4.8%. That’s a very nice reward for investors willing to bet that 2024 will not be as bad as 2023 for the company. Additionally, Wall Street believes BMY shares are worth nearly 20% more than their current price.
On the date of publication, Alex Sirois did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
