The year 2022 has roiled investors as the three key broad indices — S&P 500, Dow Jones and Nasdaq — are about to end the year with significant negative returns. The decline in the broader market indices has pulled down the price of shares of many strong companies that resulted in significant losses for investors. However, there is some hope for growth in 2023 amid recessionary fears.
Investors must note that bear markets do not continue forever. Hence, a bull market will eventually start, although the timeline is not clear yet. Thus, stocks with strong fundamentals and whose share prices have gained amid broader market decline, are likely to create robust wealth for investors when the bull market sets in.
Here we discuss three medical stocks —
Axsome Therapeutics
AXSM
,
Moderna
MRNA
and
Intuitive Surgical
ISRG
— that have rallied so far this year amid the broader market decline or that are ripe for a rebound after declining for the better part of 2022, making their valuation cheaper.
Image Source: Zacks Investment Research
Axsome Therapeutics
Shares of this Zacks Rank #3 (Hold) company have gained 98.1% so far this year despite a decline in the broader markets. The rally in the company’s share price has been driven by two promising drugs in its portfolio — Sunosi and Auvelity. While Axsome bought the sleep disorder drug, Sunosi, from Jazz Pharmaceuticals earlier in 2022, it launched the antidepressant drug, Auvelity, in October.
Apart from these two commercial drugs, Axsome is planning to submit a regulatory application to the FDA seeking approval for its migraine treatment candidate — AXS-07 — in the third quarter of 2023. Moreover, the company is also evaluating a candidate — AXS-05 — for Alzheimer’s disease agitation in a late-stage study, which can also likely lead to a new commercial drug in a couple of years.
There are several other candidates in Axsome’s pipeline in early- to mid-stage studies that will likely drive the company’s prospects in the upcoming years.
The Zacks Consensus Estimate for revenues and earnings per share (EPS) for 2023 suggests growth of 287.6% and 23%, respectively.
Moderna
This Zacks Rank #3 company created a whopping amount of wealth for its investors in 2020, following its success with the mRNA-based COVID-19 vaccine — Spikevax. However, with the risk of coronavirus waning, there has been a significant decline in Moderna’s share price in 2022. However, a new growth phase is likely to set in with annual vaccination for COVID-19 in plans. Moreover, the company will start to offer its COVID-19 vaccine directly to distributors instead of governments, which may lead to higher price realization. This may create a potential opportunity worth billions of dollars every year in annual COVID-19 vaccine sales.
Moreover, Moderna is developing multiple other vaccines for respiratory syncytial virus, cytomegalovirus, flu as well as vaccine for certain cancers. Moderna expects the flu and RSV vaccine candidates to hit the market within three years. The company is also developing a combined vaccine for flu and COVID-19.
Although shares of Moderna have declined 30.2% so far this year, the shares have been rallying since mid of October. Moderna’s long-term prospects seem encouraging.
Earnings are likely to grow 6.5% for Moderna over the next five years.
Intuitive Surgical
The company’s services had been disrupted by the COVID-19 pandemic, leading to lower top-line growth. The hospitals postponed surgeries as COVID-19 cases started piling up as well as due to stay-at-home restrictions across several economies put in place to contain the spread of the virus.
However, Intuitive Surgical’s prospects seem to be promising with continued recovery in procedural volumes. A potential recovery in demand for its robotic surgery machines will further fuel growth for the company.
Moreover, Intuitive Surgical’s leadership position — nearly 80% of the market — in surgical robots is likely to benefit the company well, as hospitals are likely to stick to Intuitive Surgical for these high-ticket purchases.
These favorable opportunities are likely to deliver top-and bottom-line growth for Intuitive Surgical going forward. The Zacks Consensus Estimate for revenues and EPS for 2023 suggests growth of 11.7% and 13.5%, respectively. The company currently carries a Zacks Rank of 3. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Although shares of ISRG have declined 24.7% so far this year, the shares have been rallying since mid of October.
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