Healthcare Stocks to Buy: Pfizer, Bristol Myers Squibb, UnitedHealth Group

Healthcare stocks have recently faced challenges such as patent cliffs, political scrutiny, and rising medical costs. Yet, the healthcare industry, crucial to the U.S. economy with per capita spending nearing $15,000, is far from declining. This context presents the opportunity for investors to consider quality healthcare stocks available at appealing prices.

Image source: The Motley Fool.

Pfizer

Pharmaceutical giant Pfizer, despite a boost from its COVID-19 vaccine, is currently considered a value stock. The company’s shares trade at over nine times this year’s earnings estimates, with a 6% yield. This high yield appears sustainable, as Pfizer’s management continues to commit to maintaining it and the company boasts $11.7 billion in cash and short-term investments for any short-term deficits.

With a robust pipeline of 95 potential candidates, including 31 in phase 3 clinical trials, Pfizer aims to grow its dividend. Analysts estimate a 5% annual earnings increase over the next three to five years.

Bristol Myers Squibb

Bristol Myers Squibb faces a steep patent cliff as key drugs, Eliquis and Opdivo, lose U.S. exclusivity in 2028. Despite this, a strong portfolio of growing drugs and promising developmental candidates create a positive outlook for the company. Currently, the company trades at nine times this year’s earnings estimates and yields 4%, with the dividend consuming only 44% of profits.

UnitedHealth Group

Notwithstanding political and cost pressures, UnitedHealth Group, a central player in U.S. healthcare, has shown resilience. Currently, the shares trade at 19 times 2026 earnings estimates and yield 2.5%, significantly above the stock’s historical norms. Analysts predict earnings to increase by more than 13% annually over the next three to five years, making UnitedHealth an attractive option at its current price.