The TSX’s healthcare sector isn’t among the top performers in 2021, although some names are excellent buying opportunities. For example, Pfizer signed a definitive agreement recently to acquire clinical-stage immuno-oncology company Trillium Therapeutics.
WELL Health Technologies (TSX:WELL) and Knight Therapeutics (TSX:GUD) carry strong buy ratings for growth investors. Based on analysts’ forecasts, their upside potential is more than 40%. You get value for money if you take positions now while the combined share prices are less than $15.
WELL Health is transforming into a HealthTech leader. The leading provider of digital electronic medical records (EMR) software and telehealth services worries about the future of primary healthcare. Management’s goal is to help in the advancement of digital health modernization in Canada. It leverages technology to empower and support patients and medical practitioners.
Hamed Shahbazi, WELL Health’s CEO, describes the $1.61 billion company as the Berkshire Hathaway of healthcare. It will only invest in highly successful and resilient companies. The management teams of the prospects must be top notch with superior track records of delivering results.
In July 2021, WELL completed a $206 million transaction to acquire MyHealth. Because of the purchase, the company is now Canada’s largest outpatient medical clinic owner-operator and leading multi-disciplinary telehealth service provider. Earlier in April, WELL acquired CRH, a company focused on delivering high-quality healthcare services and leading provider of anesthesia service.
As part of its expansion in the U.S., WELL will acquire Silicon Valley-based WISP next. WISP is a leading national provider of telehealth and e-pharmacy solutions specializing in women’s health. The global women’s health market alone is $30 billion and growing. WELL aims to address the chronic under-supply of female-focused healthcare services.
WELL reported revenue and adjusted gross profit growths of 484% and 615% in Q2 2021 versus Q2 2020 due to the acquisition of CRH. Management estimates to end the year with $400 million and about $100 million in operating adjusted EBITDA. The healthcare stock trades at $7.92 per share if you were to invest today. Analysts project the price to climb 49.09% to $11.91 in the next 12 months.
Knight Therapeutics is a $669.67 million specialty pharmaceutical company from Montreal. It focuses on acquiring, in-licensing, out-licensing, marketing, and commercializing innovative prescription pharmaceuticals. Besides the domestic market, the target markets are Latin America and the rest of the world.
Currently, Knight has strategic partners that would help maximize the value of its assets. The company also engages in funding life sciences companies. It earns interest income while strengthening relationships in the life sciences industry. Management is likewise open to investing in life sciences venture capital funds.
Knight’s financials are vastly improving from last year. In Q2 2021, net income increased 87% to $29 million versus Q2 2020. Revenue, adjusted EBITDA, and gross margin growths were 24%, 23%, and 42%. Notably, cash inflow from operations increased 54% over the prior year.
The plan is to keep growing in Canada, Latin America, and the rest of the world. Knight will capitalize on value opportunities internationally for significant business growth. Market analysts see the price climbing from $5.44 to $7.66, or a potential 40.74% appreciation.
Encouraging business outlooks
The last 18 months have been mostly about healthcare and containing the pandemic. Thus, the outlook for healthcare stocks like WELL Health Technologies and Knight Therapeutics appears very good.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares).