Personal health and wellness is one of the many secular tailwinds for healthcare companies. Players catalyzing medical advancements have benefited from elevated demand, which has supported the industry’s returns lately - over the past six months, healthcare stocks have gained 3.8%, nearly mirrorring the S&P 500.
Although these businesses have produced results, only a handful will thrive over the long term as the influx of venture capital has ushered in a new wave of competition. On that note, here are three healthcare stocks best left ignored.
Moderna (MRNA)
Market Cap: $21.09 billion
Rising to global prominence during the COVID-19 pandemic with one of the first effective vaccines, Moderna (NASDAQ: MRNA) develops messenger RNA (mRNA) medicines that direct the body's cells to produce proteins with therapeutic or preventive benefits for various diseases.
Why Do We Avoid MRNA?
- Annual sales declines of 46.7% for the past two years show its products and services struggled to connect with the market during this cycle
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 30.2% annually while its revenue grew
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 178.4 percentage points
Moderna is trading at $53.62 per share, or 10.9x forward price-to-sales. Dive into our free research report to see why there are better opportunities than MRNA.
LeMaitre (LMAT)
Market Cap: $2.43 billion
Founded in 1983 and named after a pioneering vascular surgeon, LeMaitre Vascular (NASDAQGM:LMAT) develops and manufactures specialized medical devices used by vascular surgeons to treat peripheral vascular disease and other circulatory conditions.
Why Are We Hesitant About LMAT?
- Subscale operations are evident in its revenue base of $249.6 million, meaning it has fewer distribution channels than its larger rivals
At $106.58 per share, LeMaitre trades at 37.5x forward P/E. If you’re considering LMAT for your portfolio, see our FREE research report to learn more.
10x Genomics (TXG)
Market Cap: $2.42 billion
Founded in 2012 by scientists seeking to overcome limitations in traditional biological research methods, 10x Genomics (NASDAQ: TXG) develops instruments, consumables, and software that enable researchers to analyze biological systems at single-cell resolution and spatial context.
Why Do We Think TXG Will Underperform?
- Muted 1.9% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
- Modest revenue base of $642.8 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Negative returns on capital show management lost money while trying to expand the business
10x Genomics’s stock price of $19.01 implies a valuation ratio of 4.2x forward price-to-sales. Check out our free in-depth research report to learn more about why TXG doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
