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 13.5%, 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. Keeping that in mind, here are three healthcare stocks best left ignored.
Biogen (BIIB)
Market Cap: $26.05 billion
Founded in 1978 and pioneering treatments for some of medicine's most complex challenges, Biogen (NASDAQ: BIIB) develops and markets therapies for neurological conditions, including multiple sclerosis, Alzheimer's disease, spinal muscular atrophy, and rare diseases.
Why Are We Wary of BIIB?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 6.7% annually over the last five years
- Sales are projected to tank by 9.8% over the next 12 months as demand evaporates further
- Earnings per share have dipped by 13.2% annually over the past five years, which is concerning because stock prices follow EPS over the long term
At $177.43 per share, Biogen trades at 13.8x forward P/E. Read our free research report to see why you should think twice about including BIIB in your portfolio.
Bausch + Lomb (BLCO)
Market Cap: $5.93 billion
With a nearly 170-year history dedicated to vision care and eye health innovation, Bausch + Lomb (NYSE: BLCO) develops and manufactures a comprehensive range of eye health products including contact lenses, pharmaceuticals, surgical devices, and consumer eye care solutions.
Why Does BLCO Worry Us?
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 20.4% annually while its revenue grew
- Free cash flow margin shrank by 26.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Bausch + Lomb’s stock price of $16.93 implies a valuation ratio of 19.3x forward P/E. Check out our free in-depth research report to learn more about why BLCO doesn’t pass our bar.
Evolent Health (EVH)
Market Cap: $433 million
Founded in 2011 to transform how healthcare is delivered to patients with complex needs, Evolent Health (NYSE: EVH) provides specialty care management services and technology solutions that help health plans and providers deliver better care for patients with complex conditions.
Why Are We Hesitant About EVH?
- Sales trends were unexciting over the last two years as its 7.1% annual growth was below the typical healthcare company
- Negative returns on capital show management lost money while trying to expand the business, and its decreasing returns suggest its historical profit centers are aging
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Evolent Health is trading at $3.90 per share, or 16.6x forward P/E. To fully understand why you should be careful with EVH, check out our full research report (it’s free for active Edge members).
Stocks We Like More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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