These 10 Pharma and Health Care Stocks Were the Best S&P 500 Performers Last Quarter

NEW YORK (TheStreet) -- Health care is a hot investment sector, encompassing new and emerging biotech and pharmaceutical companies as well as larger health care servicer providers. Some of the industry's best performers last quarter included well-known big benefits companies.

The S&P 500 Health Care Index rose 6.16% for the first three months of the year, outstripping the broader S&P 500 Index, which inched just 0.44% higher for the same time period. These 10 health care stocks significantly outperformed their sector index.

TheStreet paired the 10 best health care performers with TheStreet Ratings to determine whether they really are good investments going forward.

TheStreet Ratings, TheStreet's proprietary ratings tool, projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Check out which stocks were among the best health care performers in the S&P 500 to date. And when you're done with that be sure to find out which pharmaceutical company had the worst performance in the S&P 500 for the first quarter.

 

AET Chart AET data by YCharts

10. Aetna (AET)
Market Cap: $37.3 billion
Year-to-date return: 19.93%
TheStreet Ratings: Buy, A+

Aetna Inc. operates as a health care benefits company in the United States. It operates through three segments: Health Care, Group Insurance, and Large Case Pensions.

"We rate AETNA INC (AET) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, AET's share price has jumped by 42.67%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AET should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 18.4%. Since the same quarter one year prior, revenues rose by 12.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.59, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that AET's debt-to-equity ratio is low, the quick ratio, which is currently 0.54, displays a potential problem in covering short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Providers & Services industry and the overall market on the basis of return on equity, AETNA INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

 

 

ANTM Chart ANTM data by YCharts

9. Anthem Inc. (ANTM)
Market Cap: $42 billion
Year-to-date return: 22.87%
TheStreet Ratings: Buy, A

Anthem, Inc., through its subsidiaries, operates as a health benefits company in the United States. It operates through three segments: Commercial and Specialty Business, Government Business, and Other.

"We rate ANTHEM INC (ANTM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 76.47% and other important driving factors, this stock has surged by 52.95% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ANTM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ANTHEM INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ANTHEM INC increased its bottom line by earning $8.95 versus $8.66 in the prior year. This year, the market expects an improvement in earnings ($9.77 versus $8.95).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 241.9% when compared to the same quarter one year prior, rising from $148.20 million to $506.70 million.
  • ANTM's revenue growth trails the industry average of 18.4%. Since the same quarter one year prior, revenues slightly increased by 6.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, ANTM has a quick ratio of 1.63, which demonstrates the ability of the company to cover short-term liquidity needs.

 

HUM Chart HUM data by YCharts

8. Humana Inc. (HUM)
Market Cap: $26.6 billion
Year-to-date return: 23.94%
TheStreet Ratings: Buy, B

Humana Inc., together with its subsidiaries, operates as a health and well-being company. The company operates through three segments: Retail, Employer Group, and Healthcare Services.

"We rate HUMANA INC (HUM) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • HUM's revenue growth has slightly outpaced the industry average of 18.4%. Since the same quarter one year prior, revenues rose by 21.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.45, which illustrates the ability to avoid short-term cash problems.
  • Powered by its strong earnings growth of 594.73% and other important driving factors, this stock has surged by 55.60% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HUM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 583.3% when compared to the same quarter one year prior, rising from -$30.00 million to $145.00 million.
ENDP Chart ENDP data by YCharts

7. Endo International Plc (ENDP)
Market Cap: $16 billion
Year-to-date return: 24.38%
TheStreet Ratings: Hold, C

Endo International plc, a specialty healthcare company, focuses on branded and generic pharmaceuticals and devices worldwide. It operates through four segments: U.S. Branded Pharmaceuticals, U.S. Generic Pharmaceuticals, Devices, and International Pharmaceuticals.

"We rate ENDO INTERNATIONAL PLC (ENDP) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 8.2%. Since the same quarter one year prior, revenues rose by 36.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 93.62% and other important driving factors, this stock has surged by 32.08% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • ENDO INTERNATIONAL PLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ENDO INTERNATIONAL PLC reported poor results of -$5.28 versus -$4.67 in the prior year. This year, the market expects an improvement in earnings ($4.45 versus -$5.28).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, ENDO INTERNATIONAL PLC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Currently the debt-to-equity ratio of 1.86 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, ENDP maintains a poor quick ratio of 0.72, which illustrates the inability to avoid short-term cash problems.

 

BIIB Chart BIIB data by YCharts

6. Biogen Inc. (BIIB)
Market Cap: $96.6 billion
Year-to-date return: 24.39%
TheStreet Ratings: Buy, A

Biogen Idec Inc. discovers, develops, manufactures, and markets therapies for the treatment of neurological, autoimmune, and hematologic disorders in the United States and internationally.

"We rate BIOGEN INC (BIIB) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 36.0%. Since the same quarter one year prior, revenues rose by 34.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • BIIB's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, BIIB has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Biotechnology industry and the overall market, BIOGEN INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The gross profit margin for BIOGEN INC is currently very high, coming in at 90.65%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 33.45% is above that of the industry average.

 

CI Chart CI data by YCharts

5. Cigna Corp. (CI)
Market Cap: $33.7 billion
Year-to-date return: 25.78%
TheStreet Ratings: Buy, A+

Cigna Corporation, a health services organization, provides insurance and related products and services in the United States and internationally.

"We rate CIGNA CORP (CI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 18.4%. Since the same quarter one year prior, revenues slightly increased by 9.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Health Care Providers & Services industry and the overall market, CIGNA CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 37.20% and other important driving factors, this stock has surged by 57.76% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CIGNA CORP has improved earnings per share by 37.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CIGNA CORP increased its bottom line by earning $7.82 versus $5.20 in the prior year. This year, the market expects an improvement in earnings ($8.45 versus $7.82).

 

ABC Chart ABC data by YCharts

4. AmerisourceBergen Corp. (ABC)
Market Cap: $24.6 billion
Year-to-date return: 26.08%
TheStreet Ratings: Hold, C+

AmerisourceBergen Corporation sources and distributes pharmaceutical products to healthcare providers, pharmaceutical and biotech manufacturers, and specialty drug patients in the United States and internationally.

"We rate AMERISOURCEBERGEN CORP (ABC) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 18.4%. Since the same quarter one year prior, revenues rose by 15.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 189.37% to $896.96 million when compared to the same quarter last year. In addition, AMERISOURCEBERGEN CORP has also vastly surpassed the industry average cash flow growth rate of 113.51%.
  • Compared to its closing price of one year ago, ABC's share price has jumped by 72.84%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Providers & Services industry and the overall market, AMERISOURCEBERGEN CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for AMERISOURCEBERGEN CORP is currently extremely low, coming in at 2.24%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.59% trails that of the industry average.

 

MNK Chart MNK data by YCharts

3. Mallinckrodt Plc. (MNK)
Market Cap: $24.6 billion
Year-to-date return: 27.89%
TheStreet Ratings: Hold, C

Mallinckrodt public limited company develops, manufactures, markets, and distributes specialty pharmaceutical products and medical imaging agents worldwide. The company operates through two segments, Specialty Pharmaceuticals and Global Medical Imaging.

"We rate MALLINCKRODT PLC (MNK) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MNK's very impressive revenue growth greatly exceeded the industry average of 8.2%. Since the same quarter one year prior, revenues leaped by 60.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.78, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, MNK has a quick ratio of 1.84, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to other companies in the Pharmaceuticals industry and the overall market, MALLINCKRODT PLC's return on equity significantly trails that of both the industry average and the S&P 500.
  • MALLINCKRODT PLC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MALLINCKRODT PLC swung to a loss, reporting -$3.57 versus $0.06 in the prior year. This year, the market expects an improvement in earnings ($7.32 versus -$3.57).

 

BSX Chart BSX data by YCharts
2. Boston Scientific Corp. (BSX)
Market Cap: $23.5 billion
Year-to-date return: 33.96%
TheStreet Ratings: Buy, B-

Boston Scientific Corporation develops, manufactures, and markets medical devices for use in various interventional medical specialties worldwide. The company operates in three segments: Cardiovascular, Rhythm Management, and MedSurg.

"We rate BOSTON SCIENTIFIC CORP (BSX) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BSX's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, BSX's share price has jumped by 31.82%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BSX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has significantly increased by 61.17% to $440.00 million when compared to the same quarter last year. In addition, BOSTON SCIENTIFIC CORP has also vastly surpassed the industry average cash flow growth rate of -7.23%.
  • The gross profit margin for BOSTON SCIENTIFIC CORP is currently very high, coming in at 74.40%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -15.84% is in-line with the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.66, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that BSX's debt-to-equity ratio is low, the quick ratio, which is currently 0.62, displays a potential problem in covering short-term cash needs.

 

 

HSP Chart HSP data by YCharts

1. Hospira Inc. (HSP)
Market Cap: $15 billion
Year-to-date return: 43.41%
TheStreet Ratings: Buy, B

Hospira, Inc. provides injectable drugs and infusion technologies to develop, manufacture, distribute, and market products worldwide. The company operates through Americas, EMEA, and APAC segments.

"We rate HOSPIRA INC (HSP) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 8.2%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.17, which illustrates the ability to avoid short-term cash problems.
  • HOSPIRA INC has improved earnings per share by 5.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HOSPIRA INC turned its bottom line around by earning $1.95 versus -$0.05 in the prior year. This year, the market expects an improvement in earnings ($2.39 versus $1.95).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Pharmaceuticals industry average, but is less than that of the S&P 500. The net income increased by 6.9% when compared to the same quarter one year prior, going from $33.50 million to $35.80 million.
  • Net operating cash flow has increased to $327.10 million or 27.82% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -9.11%.

 

 

 

 

 

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