StockStory, an automated stock screening service, identified Hims & Hers Health as a preferred healthcare investment while advising against Supernus Pharmaceuticals and Elanco Animal Health. The analysis comes amid a period where healthcare stocks have gained 32% over the past six months, outpacing the S&P 500's 14.3% increase. StockStory states that only a few companies in the sector will sustain long-term growth due to increased competition from venture capital funding.
Supernus Pharmaceuticals, which develops treatments for central nervous system disorders, has a market capitalization of $2.45 billion. The company holds eight FDA-approved medications targeting conditions such as epilepsy, ADHD, Parkinson's disease, and migraine. StockStory cites slower annual revenue growth of 6.5% over the last five years compared to peers as a primary concern. The firm also notes that Supernus's revenue base of $822.8 million indicates subscale operations with fewer distribution channels than larger rivals. Additionally, the company's free cash flow margin shrank by 16.5 percentage points over the same five-year period. At a stock price of $41.80, Supernus trades at a forward price-to-sales ratio of 2.7x.
Elanco Animal Health, which sells medications and vaccines for pets and farm animals in more than 90 countries, has a market capitalization of $11.26 billion. The company became independent from Eli Lilly in 2018. StockExpress flags Elanco's annual revenue growth of 2% over the last five years as below sector standards. The analysis points to a decline in efficiency, with adjusted operating margins falling by 3.5 percentage points over five years. StockStory also reports negative returns on capital, suggesting some growth strategies have not yielded expected results. Elanco shares trade at $22.52, representing a forward P/E ratio of 18.6x.
Hims & Hers Health operates a consumer-focused telehealth platform connecting patients with providers for prescriptions and wellness products. The company has a market capitalization of $6.55 billion and originally focused on conditions such as hair loss and sexual health. StockStory favors Hims & Hers based on customer trends over the past two years, which show a steady flow of new contracts that may increase in value. The company's free cash flow margin expanded by 15.9 percentage points over the last five years, providing flexibility for investments and share buybacks or dividends. Improving returns on capital indicate that past investments are beginning to deliver value. Hims & Hers Health trades at $28.09 per share, or 23.2x forward P/E.
StockStory promotes its AI platform for identifying market-beating stocks, citing examples like Nvidia and Comfort Systems from its 2020 list.