We recently published a list of the 8 most promising healthcare stocks by hedge funds. In this article, we'll take a look at how AbbVie Inc. (NYSE:ABBV) stands compared to the other most promising healthcare stocks, according to hedge funds.
The healthcare sector relies on advances in medical technology, particularly devices used to prevent, diagnose, and treat diseases. Unlike pharmaceuticals, medical devices work through physical or mechanical means rather than chemical processes. Major products include pacemakers, imaging devices, dialysis machines, and implants.
The healthcare sector is growing in the United States. According to recent estimates, the country's health spending will increase by 7.5% in 2023, outpacing the same year's nominal GDP growth rate. A record 93.1% of Americans now have health insurance, which fueled a surge in health spending last year. The country's national health spending is expected to increase by an average of 5.6% from 2023 to 2032, faster than the projected GDP growth rate of 4.3%.
Moreover, this industry is rapidly growing on a global scale. Healthcare profits are expected to grow at a compound annual growth rate (CAGR) of 7%, from $583 billion in 2022 to more than $800 billion by 2027, according to a recent McKinsey forecast. Although labor shortages and rising inflation continued to weigh on business in 2023, 2024 is expected to be a year of recovery due to a favorable risk-reward environment in the sector. According to the American investment firm, the events of 2023 have created an attractive opportunity for investors to participate in the healthcare industry.
Investment in artificial intelligence (AI) in healthcare has also increased dramatically in recent years, growing twice as fast as IT, according to a study released this month by Silicon Valley Bank. According to the report, companies using AI account for one in every four dollars spent in the healthcare industry. Silicon Valley Bank predicts that more than $11 billion will be spent on the AI healthcare industry this year, with $2.8 billion already invested in 2024.
Investor confidence in the healthcare industry remains high, according to Deloitte's 2024 Global Healthcare Sector Outlook. The industry received $31.5 billion in funding from private equity between 2019 and 2022. The U.S. healthcare sector could save nearly $360 billion over the next five years, thanks to a large number of companies integrating artificial intelligence into their operations. In the near future, AI will likely have a significant impact on healthcare management, diagnosis, treatment, and patient care. Predictive analytics and medical record automation are expected to further improve the effectiveness of healthcare providers and their services.
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In recent months, rising economic uncertainty has prompted a shift toward more defensive stocks, with healthcare emerging as a major beneficiary. The broader market's healthcare sector is up more than 3.6%, with a return of more than 11% over the past year. With this in mind, we take a look at some of the most promising stocks in the healthcare sector.
Our methodology selects the most heavily weighted stocks from the iShares Global Healthcare ETF and ranks them based on the total number of hedge fund holders as of Q3 2024 as tracked in the Insider Monkey database. Ranked.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
Are hedge funds betting big on AbbVie Inc. (ABBV)?
A pharmacist handing medicines to a patient at a drugstore or pharmacy.
Number of hedge fund holders: 68 people
AbbVie Inc. (NYSE:ABBV) is a global biopharmaceutical company that develops and markets advanced treatments for complex and chronic conditions. The company focuses primarily on immunology, oncology, neuroscience, and virology. AbbVie's flagship product, Humira, is used to treat a variety of autoimmune diseases, including rheumatoid arthritis and Crohn's disease, and is the cornerstone of its success.
AbbVie (NYSE:ABBV) is expected to see mid-single-digit sales growth over the next three years due to low patent losses. Additionally, the $10 billion acquisition of ImmunoGen expands its oncology portfolio to include Elahere, an antibody-drug combination, which is expected to make a significant contribution. Barclays predicts revenue will exceed $2 billion by the end of 2010.
AbbVie Inc. (NYSE:ABBV) reported second-quarter 2024 global revenue of $14.462 billion, up 4.3% year-over-year and operating growth of 5.6%, beating Wall Street estimates by 3.1%. I did. The company's immunology business contributed significantly to business expansion, with Skyrizi sales increasing approximately 45% to $2.7 billion, and Rinvoq sales increasing approximately 56% to $1.4 billion. Additionally, global sales for the oncology portfolio increased 10.5% to $1.6 billion. Unfortunately, competition from biosimilars somewhat offset this increase, with Humira's sales down 29.8% to $2.8 billion.
As of Q3 2024, of the total hedge funds tracked by Insider Monkey, 68 hedge funds held shares in the company, including Citadel Investment Group, which holds more than $487.2 million in It is the largest shareholder holding shares.
Overall, ABBV ranks 5th on hedge funds' list of most promising healthcare stocks. While we see the potential in healthcare companies, we believe AI stocks have a better chance of delivering higher returns faster. If you're looking for AI stocks with more promise than ABBV but trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: 8 Best Widemot Stocks to Buy Now and 30 Most Important AI Stocks, According to BlackRock
Disclosure: None. This article was originally published on Insider Monkey.
