We recently The 7 Best Mid-Cap Healthcare Stocks to Buy Now In this article, we will analyze whether Insmed Incorporated (NASDAQ:INSM) is a top stock in the Healthcare sector for elite hedge funds.
Issues in the health and medical field
The healthcare industry is considered to be a fairly defensive sector due to its necessity. According to a December 2023 World Health Organization report, global healthcare spending hit a record high of $9.8 trillion in 2021, or 10.3% of global gross domestic product (GDP). However, the distribution of spending remains highly unequal, with public health spending increasing around the world, while government healthcare spending in low-income countries has declined due to greater reliance on external medical aid. In 2021, 11% of the world's population lived in countries that spent less than $50 per person per year on healthcare, while high-income countries spend around $4,000 per person. Moreover, low-income countries account for only 0.24% of global healthcare spending, despite making up 8% of the world's population. The report noted that while public spending on healthcare increased significantly during the peak of the COVID-19 pandemic, this increase is unlikely to be sustained in the long term as countries focus on economic challenges such as slowing growth, high inflation, and rising debt repayments. Dr Bruce Aylward, WHO Assistant Executive Director for Universal Health Coverage Life Course, said:
“To make progress towards universal health coverage, sustained public funding for health is urgently needed. This is particularly important at a time when the world faces the climate crisis, conflict and other complex emergencies. People's health and well-being need to be protected by resilient health systems that can withstand these shocks.”
Apart from that, the healthcare industry is also facing challenges such as labour shortages and rising costs in the aftermath of the COVID-19 pandemic. Our article on the best healthcare ETFs covers this in detail.
Adversity breeds innovation
While the overall market has significantly outperformed the healthcare sector over the past year, healthcare companies have been working hard to drive innovation in the industry. AI and other technologies are driving these companies. However, some companies have been using these technologies for a while. For example, Pfizer has been using AI for pharmacovigilance since 2014. The company also uses AI to analyze huge data sets, predict treatment outcomes, and streamline the clinical development process. The company commented in one of its reports:
“If the ultimate goal of self-driving cars is to navigate crowded city streets, the goal of pharmaceutical research is to find the link between potential treatments and their effectiveness in treating diseases.”
AstraZeneca CFO Aradhana Sarin told CNBC on May 21 that the company is in a “new era of growth.” The company is expected to generate $80 billion in revenue by 2030. Sarin said in the interview that the company plans to launch 20 new drugs by then, some of which could be $5 billion drugs. The CFO listed some of the company's upcoming innovations, including replacing chemotherapy with antibody-drug conjugates (ADCs) and radiation therapy with radiopharmaceuticals. Pascal Soriot, CEO of the biopharmaceutical giant, said the following during the company's first-quarter 2024 earnings call:
“Today, I'll tell you what we're trying to accomplish in terms of financial progress in '24, '25, '26. Tomorrow, I'll talk about what our strategy is there, what we're going to do in the pipeline, what other products will drive our growth through 2030, as we plan to launch products that will drive our growth between 2025 and 2030. And the day after tomorrow is really 2030 and beyond. What are the technologies that we think will shape the future of healthcare in oncology and beyond? And how are we building, how are we building platforms that will help shape the future of healthcare in the therapeutic areas that we're working in?”
Close-up of a hand holding a vial of biopharmaceutical drug ready for administration.
Our Methodology
For this article, we used Finviz's stock screener to identify approximately 140 healthcare companies with market capitalizations between $2 billion and $10 billion. The list was narrowed down to the seven stocks with the highest institutional holdings. The best mid-cap healthcare stocks are listed in ascending order of hedge fund sentiment.
Hedge fund data comes from Insider Monkey's database of 919 elite hedge funds as of Q1 2024. Why are we interested in stocks where hedge funds are concentrated? The reason is simple: our research shows us that we can outperform the market by mimicking the top holdings of the best hedge funds. Our quarterly newsletter strategy selects 14 small and large stocks each quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points (see details here).
Is Insmed Incorporated (NASDAQ:INSM) the best healthcare stock?
Insmed Incorporated (NASDAQ:Insumu)
Number of hedge fund holders: 48
Insmed Incorporated (NASDAQ:INSM) is a New Jersey-based company dedicated to developing and commercializing therapies for people with serious rare diseases.
Insmed Incorporated (NASDAQ:INSM) has a buy rating from 12 Wall Street analysts. As of May 24, the average target price is $46.27, up 110.32% from the last price of $22.00. On May 13, Mizuho analyst Graig Suvannavejh increased his target price on the stock from $35 to $36 and maintained a buy rating.
During the first quarter, 48 hedge funds held shares of Insmed Incorporated (NASDAQ:INSM), totaling $690,103,000. As of March 31, Deep Track Capital was the company's largest shareholder, with holdings of $129,781,000.
ClearBridge Investments mentioned Insmed Incorporated (NASDAQ:INSM) in their Q1 2024 investor letter.
“We are pleased to report that we are seeing fundamental improvements in the companies we hold in our portfolio, some of which have been recent additions to the portfolio and some of which are the subject of repositioning exercises due to be carried out in 2023.
Q1 was once again a fertile period for new ideas with nine new investments. As is our practice, these initial investments represent modest position sizes that we intend to build over time.
Insmed Incorporated (NASDAQ:INSM) is a biopharmaceutical company focused primarily on rare lung diseases. The company has a growing portfolio of approved marketed products in domestic and international markets, with opportunities to expand beyond their original indications. Additionally, the company has several late-stage clinical candidates with potential to become blockbusters.
Insmed Incorporated (NASDAQ:INSM) ranked #6 on our list of the best mid-cap healthcare stocks. Check out our free report on the top 10 hedge fund healthcare stocks. The 7 Best Mid-Cap Healthcare Stocks to Buy Now.
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Disclosures: None. This article was originally published on Insider Monkey.
