Uncovering the Hidden Gems: 3 Undervalued Healthcare Stocks to Watch

In the ever-evolving healthcare landscape, where industry giants often hog the limelight, there lies a treasure trove of underappreciated stocks that hold immense potential. Three Motley Fool contributors have identified a trio of healthcare companies that they believe are surprisingly underrated and worthy of investor attention: Bristol Myers Squibb, Moderna, and Pfizer.

Uncover the Untapped Potential in These Overlooked Healthcare Stocks

Bristol Myers Squibb: A Pharmaceutical Powerhouse at a Bargain Price

Bristol Myers Squibb, a renowned pharmaceutical company, has faced its fair share of challenges in recent years, leading to a significant discount in its stock price. Despite the headwinds, this healthcare giant remains a compelling investment opportunity for those willing to exercise patience and foresight.The company's debt load, acquired through strategic acquisitions, and concerns over the potential loss of exclusivity for its top-selling drugs, Eliquis and Opdivo, have weighed heavily on investor sentiment. However, these challenges are not insurmountable, and Bristol Myers Squibb is actively addressing them.The pharmaceutical giant has been diligently working to bolster its pipeline, obtaining new drug approvals and pursuing strategic acquisitions to diversify its portfolio. By 2026, the company projects that its new product offerings will generate an impressive $10 billion in annual revenue, a testament to its commitment to innovation and growth.While the potential loss of revenue from Eliquis and Opdivo is a valid concern, Bristol Myers Squibb's investment in research and development, coupled with its proven track record of developing and commercializing successful drugs, suggests that it is well-positioned to overcome these obstacles. With the stock trading at just 7 times its estimated future earnings, the company presents an attractive value proposition for investors willing to take a long-term view.

Moderna: The mRNA Pioneer Poised for a Comeback

Moderna, the pioneering mRNA technology company, has faced its fair share of challenges in recent times, leading to a significant decline in its stock price. However, savvy investors may find that the reasons to be bullish on Moderna are hiding in plain sight.The company's revenue has been declining, and it has reported hefty net losses in recent quarters. Additionally, Moderna has cut its 2025 sales forecast and delayed the development timeline for several new products, further dampening investor sentiment. Yet, these short-term setbacks may be obscuring the true potential of this innovative healthcare company.Moderna's pipeline is brimming with promising programs, with the company expecting to win regulatory approvals for 10 new products over the next three years. Two of these new products, a next-generation COVID-19 vaccine and a combination flu/COVID vaccine, could reach the market relatively soon, providing a much-needed boost to the company's top line.Moreover, Moderna is on the cusp of generating pivotal data from late-stage trials for several of its key pipeline candidates, including vaccines for cytomegalovirus (CMV), methylmalonic acidemia, and propionic acidemia. The recent launch of its respiratory syncytial virus (RSV) vaccine, mResvia, also holds significant commercial potential, with plans to expand its label to include high-risk adults.With shares trading at a price-to-sales ratio below 4.9, Moderna presents an intriguing opportunity for investors willing to look beyond the current challenges and focus on the company's long-term growth prospects. As Moderna's new products begin to contribute to its top line, the market's perception of the company may shift, potentially unlocking substantial upside for patient investors.

Pfizer: A Pharmaceutical Giant Poised for a Resurgence

Pfizer, the renowned pharmaceutical powerhouse, has faced its fair share of challenges in recent years, leading to a decline in investor sentiment. However, savvy investors may find that the market is severely underrating the company's potential.While Pfizer's financial results have failed to impress in the past two years, particularly in comparison to the pandemic-fueled heights of 2022, this is not a permanent state of affairs. The company has significantly expanded its pipeline through internal development and strategic acquisitions, positioning itself for a resurgence in the coming years.Pfizer has strengthened its position in oncology, made inroads into the promising GLP-1 weight loss market, and bolstered its vaccine pipeline, which now boasts 113 programs, including six under review for approval. This diversified and robust pipeline is a testament to Pfizer's commitment to innovation and its ability to adapt to changing market dynamics.While no pharmaceutical company can guarantee a 100% success rate, Pfizer's pipeline is more than capable of transforming its product lineup in the next five years. In the meantime, the company's revenue and earnings are expected to stabilize as the demand for COVID-19 vaccines and medicines becomes more predictable.Pfizer's share price may not have fully recovered yet, but the company's long-term prospects are promising. As the market recognizes Pfizer's ability to navigate the current challenges and capitalize on its expanded pipeline, the stock's valuation is likely to reflect its true potential, presenting an attractive opportunity for investors willing to take a long-term view.