3 Healthcare Stocks at All-Time Highs: Are They Buys?

Healthcare stocks, in general, are badly underperforming the S&P 500 so far this year. In fact, the S&P 500 index has delivered a year-to-date return that triples the return of the Health Care Select Sector Index, which consists only of healthcare stocks in the S&P 500.

As always, though, there are exceptions. Three healthcare stocks are not only beating the S&P 500 this year, they’re at all-time highs…

AstraZeneca (NYSE:AZN)Baxter International (NYSE:BAX), and Zoetis (NYSE:ZTS) are sizzling hot right now. But are these hot healthcare stocks smart picks for investors to buy?

1. AstraZeneca

British drugmaker AstraZeneca is up 17% so far in 2019. Most of that gain has come in just the last few weeks after the company reported encouraging second-quarter results.

AstraZeneca’s oncology lineup is firing on all cylinders. Total oncology sales for the company in the first half of 2019 soared 52% year over year. The biggest moneymaker right now, Tagrisso, made over $1.4 billion in the first six months of the year, up 86% over the same period in 2018.

But AstraZeneca claims two cancer drugs that are growing even faster than Tagrisso. Sales of Imfinzi skyrocketed 248% in the first half of 2019 to $633 million. Sales of Lynparza nearly doubled to $520 million.

AstraZeneca is scheduled to present data in September that could drive the stock even higher. The big pharma company plans to report results from Imfinzi in combination with chemotherapy as a first-line treatment for small cell lung cancer (SCLC), and for Lynparza in combination with chemotherapy in treating relapsed SCLC patients.

2. Baxter

Baxter’s shares have jumped 32% year to date. Unlike AstraZeneca, Baxter generated most of its gains in the first quarter of 2019. However, the two healthcare stocks have one thing in common: Positive quarterly updates served as their major catalysts.

In January, Baxter reported its 2018 fourth-quarter results. Those results weren’t overly impressive at first glance. Baxter’s Q4 revenue increased by only 2% year over year. However, the company’s adjusted earnings per diluted share rose 22% from the prior-year period. More importantly, Baxter easily beat Wall Street estimates.

The company followed up with good news in its first-quarter and second-quarter updates. In both quarters, Baxter topped analysts’ estimates. It also boosted its full-year 2019 earnings guidance after its Q2 earnings beat.

Baxter should have growth opportunities ahead as the home hemodialysis market picks up momentum. In addition, the company is launching several new products, including intravenous insulin product Myxredlin and intravenous nutrition product Clinolipid…

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