2 Health Care Stocks Hitting 52-Week Highs: MHS, ISRG

NEW YORK ( TheStreet) - Medco Health Solutions ( MHS) and Intuitive Surgical ( ISRG) both hit 52-week highs on Monday.

Both stocks are rated buy at TheStreet Ratings.

Medco Health Solutions

The pharmacy benefit manager got a boost as expectations grew that it would be able to complete its planned merger with Express Scripts ( ESRX), according to The Wall Street Journal, which cited a report by anti-trust research firm MLex as saying it expects the combination to win anti-trust approval.

The company also reported its above-consensus fourth-quarter earnings last week.

"New business trends were more positive than we expected, as the company has won $2.6 billion in gross new business in 2012," William Blair analysts wrote in a Feb. 21 report. "While net new wins are still negative for the year (given previously disclosed losses), there have been no new significant losses since the third-quarter call, suggesting net new business wins over the past three months were also about $1 billion."

Shares of Medco Health Solutions hit a 52-week high of $68.40. The stock's 52-week low of $44.60 was set on Oct. 4.

Medco Health Solutions has an estimated price-to-earnings ratio for next year of 14.06; the average for health care providers is 18.75. For comparison, both WellPoint ( WLP) and Express Scripts ( ESRX) have lower forward P/Es of 7.77 and 12.8 respectively.

Twelve of the 22 analysts who cover Medco Health Solutions rate it at buy; 10 analysts give the stock a hold rating.

TheStreet Ratings gives Medco Health Solutions a B grade with a buy rating and $73.98 price target. The stock has risen 19.3% year to date.

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Intuitive Surgical

Last month, the maker of the da Vinci robotic surgery system reported fourth-quarter earnings of $151.2 million, or $3.75 a share, easily beating Wall Street's expectation for a profit of $3.35 a share.

"We believe that the company can sustain 20% topline growth and operating margins for the next three to five years given the many layers of growth we discussed in our recent Update Report," William Blair analysts wrote in a Feb. 2 report. "Therefore, investors should maintain positions--and add more aggressively on pullbacks--despite a premium valuation (33 times our GAAP 2012 EPS of $14.35 and 28.7 times cash EPS of $16.85) and we rate the stock Outperform."

Shares of Intuitive Surgical hit a 52-week high of $518.47.The stock's 52-week low of $315.01 was set on March 16.

Intuitive Surgical has a forward P/E of 31.02; the average for medical equipment companies is 30.24. For comparison, both Medtronic ( MDT) and St. Jude Medical ( STJ) have lower forward P/Es of 10.25 and 11.61 respectively.

Ten of the 17 analysts who cover Intuitive Surgical rated it hold; seven analysts gave the stock a buy rating.

Intuitive Surgical gets an A- grade from TheStreet Ratings with a buy rating and $664.60 price target. The stock has increased 11.76% year to date.

-- Written by Alexandra Zendrian in New York.

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