MyWallSt’s 3 Favorite Healthcare Investments, Ranked

The pandemic and subsequent vaccine news has thrust healthcare stocks into the spotlight — here are our favorites.

Jan. 6, 2021

Amidst recent vaccine news, we saw some healthcare share prices slashed. However, I suspect that as life goes back to normal, the space will continue to thrive, resulting in solid growth for these 3 companies. 

1. Teladoc

The COVID-19 pandemic put Teladoc (NYSE: TDOC) in the spotlight due to its focus on telemedicine and virtual health. It is the largest telehealth company on the market, with a 75% market share. Q3 revenue grew by 109% yYear-over-yYear (YoY) to $288.8 million, with total visits rising 206% YoY to 2.8 million, and total paid memberships increasing by 47$ YoY to 51.5 million.

Teladoc is constantly innovating. It recently acquired Livongo, meaning that the company now provides monitoring and coaching services for chronic conditions such as obesity, diabetes, and hypertension to Teladoc’s consumer base. Livongo’s chronic condition management tools will be integrated into Teladoc’s app, making it more valuable for users. 

Teladoc recently launched a new mental health service, giving members convenient, quick, and remote access to psychiatrists, psychologists, and therapists. The company acquired InTouch Technology, an enterprise platform, meaning Teladoc can sell a medium that enables doctors and practitioners to connect to their clients virtually. Users can now initiate in-app virtual sessions with the company’s network of practitioners or with local healthcare specialists. InTouch also has over 40 clinical use cases to add to Teladoc’s video conferencing platform, which will help the company secure its position as the leader in virtual healthcare solutions globally. Teladoc is projected to reach a total revenue of $1.3 billion in 2020 with projected revenue growth of 30% to 40% over the next three years, thanks to these recent acquisitions and developments.

2. BioNTech

BioNTech (NASDAQ: BNTX), originally founded to develop personalized drugs for cancer treatment, is one of the companies leading the COVID-19 vaccine development and manufacturing. BioNTech partnered with Pfizer in 2018 to rapidly develop influenza vaccines and subsequently the COVID-19 vaccine. 

DI don’t expect the growth potential for BioNTech to fade when the vaccine is fully deployed. The vaccine is great news for the company, but it’s the company’s high-tech drug-discovery systems and its oncology technology aiming to individualize cancer medicine that interests me most. BioNTech’s drug-development is mainly based on mRNA, which is a new, advanced technology with great potential although it is in its early stages.

If BioNTech’s research and development over the next few years is successful, the company could expand into making cystic fibrosis treatments as well as solid tumor and cancer treatments using its mRNA technology, which no other company has seen success with. This investment is not low-risk as this technology is not fully developed, although the growth potential for BioNTech should their mRNA development research succeed is substantial. 

If successful, the company will have the opportunity to expand into the cancer, solid tumor, and cystic fibrosis treatments space with life-changing technology and treatments, which makes me believe that this is a great investment. Given the company’s recent success with its mRNA research and the vaccine, I suspect that more effort and capital will be injected into this research in the near future, which will aid development of the technology and ultimately the growth of the company.   

3. DexCom

DexCom (NASDAQ: DXCM) develops, manufactures, and distributes Continuous Glucose Monitoring (CGM) systems to help people manage diabetes. More than 1 in 10 people in the U.S. suffer from diabetes. The number of diabetics worldwide will, unfortunately, rise to 700 million by 2045, and so DexCom’s products will see an increase in demand. 

DexCom has been consistently growing over recent years as more people switch from traditional blood glucose meters to CGM devices. DexCom’s revenue has increased at a rate of 43.5% compounded annually over the past decade, with revenues of $1.8 billion over the past year. The global CGM market is worth $4.2 billion and is expected to register a 17.24% Compound Annual Growth Rate (CAGR) through 2025. The pandemic resulted in DexCom’s revenue growth decreasing due to difficulty in acquiring new customers. I expect this to start increasing again post-COVID-19.

DexCom is preparing to launch its new, far cheaper to produce, G7 CGM system next year. CFO, Quentin Blackford, believes the G7 will “enable the company to open up the opportunity to compete in lower-priced channels and to be aggressive in the marketplace to push sales volumes”. The company has focused on improving integration with other automated insulin delivery systems, which is expected to increase sales this year. With this, DexCom’s increasing economies of scale, higher CGM demand, and the launch of the G7 being the major growth drivers of the company for the next 5-10 years.

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MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Netflix. Read our full disclosure policy here.