Wolfe Research says it’s time to get back into healthcare stocks. Technical analyst Rob Ginsberg wrote in a note on Tuesday that the sector has been one of the worst performers over the past month, down more than 4% from September to October. “As evidenced by XLV (Healthcare Select Sector SPDR Fund), prices returned to the 50-day (moving average) on this relief rally,” he said. “Not yet overbought, this looks to us like the early stages of a re-acceleration back to the highs. If that is the case, stocks across the sector should benefit.” XLV YTD Mountain Healthcare Select Sector SPDR Fund Year to Date Along with this rally, there’s the added benefit of many healthcare stocks paying dividends. With that in mind, CNBC Pro screened stocks in the S&P 500 Healthcare sector with dividend yields of 1.5% or more, which is higher than the S&P 500’s yield. FactSet data shows that at least 51% of Wall Street analysts who cover each stock rate it a buy. Abbott Laboratories makes and sells pharmaceuticals, diagnostic and nutritional products, and medical devices, and investors can expect a 1.9% dividend yield. About 55% of analysts have a buy rating on the stock, which represents an 11% upside potential from the average price target, according to FactSet. On Wednesday, Abbott reported third-quarter profit and revenue. The company also raised the lower end of its full-year earnings per share guidance to a range of $4.64 to $4.70 per share, from the previous range of $4.61 to $4.71 per share. Chief Executive Robert Ford said in a statement: “We are well positioned to achieve the high end of our initial guidance range this year and maintain strong momentum next year.” Abbott stock has risen 8% this year, with shares rising 8% since July 26 Abbott was ordered to pay $95 million in damages in the case of its premature infant formula, and its stock price has risen by about 12% since then. Investors in global medical technology company Becton, Dickinson and Company receive a 1.6% dividend yield. About 60% of analysts have a buy rating on the stock, which has room for nearly 16% upside from the average price target, according to FactSet. Becton’s stock price has been little changed so far this year. Health insurer Cigna also yields 1.6%, nearly 13% above analysts’ average price target. Nearly 71% of analysts covering the stock rate it a Buy, according to FactSet. Cigna’s Express Scripts unit is one of the pharmacy benefit managers accused by the Federal Trade Commission of “artificially” inflating the cost of insulin for patients while increasing profits. Cigna, CVS Health and UnitedHealth Group recently filed a motion asking FTC Chairman Lina Khan and two other commissioners to recuse themselves from the lawsuit over statements they claimed were biased against the companies. CI YTD Mountain Cigna Year-to-Date Cigna beat expectations for second-quarter earnings and revenue when it reported results in August. Third-quarter results are expected to be announced on October 31. Finally, Merck yields 2.8% and has nearly 26% upside from the consensus analyst price target. About 64% of analysts have a buy rating on the stock. The global healthcare company focuses on prescription medicines, including vaccines and biologic therapies. On Thursday, Merck said its experimental treatment for respiratory syncytial virus (RSV) in infants showed positive results in a mid-to-late-stage trial. In July, Merck reported second-quarter revenue and adjusted earnings that beat analysts’ expectations. Merck said sales of its cancer drug Keytruda and other oncology treatments were strong, as was its vaccine portfolio and newly launched cardiovascular drug Winrevair. However, sales of the company’s HPV vaccine Gardasil were lower than expected. Merck will also report third-quarter results on October 31.
