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Don't Overlook These 2 Highly Ranked Medical Stocks: COLL, MASI

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Two medical sector stocks that are standing out among the recent additions to the Zacks Rank #1 (Strong Buy) list are Collegium Pharmaceutical (COLL - Free Report)  and Masimo Corporation (MASI - Free Report) .

Correlated with the trend of rising earnings estimate revisions (EPS), Collegium has made its way onto the coveted strong buy list as an undervalued specialty pharmaceutical company that treats central nervous system, respiratory, and skin-related disorders.

Meanwhile, Masimo’s increased probability has become attractive as a provider of non-invasive health monitoring systems that provide real-time insight into patient physiology without the need for invasive procedures.

 

Collegium’s “A” Value Score

Magnifying Collegium’s steady growth is the pharmaceutical company’s “cheap” valuation, considering its top and bottom lines are expected to stretch 20% and 9% this year, respectively, and low-single digit growth marks are in the forecast for fiscal 2026.

The favorable trajectory makes Collegium stock look undervalued at just 5X forward earnings and under the optimum level of less than 2X sales. Trading well below the S&P 500’s averages, Collegium also offers a noticeable discount to its Zacks Medical-Drugs Industry average of 15.5X forward earnings and 3.4X forward sales.

Furthermore, in a crowded industry that includes more than 130 smaller-cap pharmaceutical drug companies, many are in speculative trial phases and aren’t profitable, whereas Collegium’s EPS projections have edged to over $7 per share.

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Masimo’s “A” Growth Score

Aforementioned, Masimo’s strong buy rating is highlighted by its increased profitability, with annual earnings expected to spike 20% in FY25 to $5.30 per share versus EPS of $4.40 last year.

Plus, FY26 EPS is projected to rise another 7% to $5.68. Starting to justify a slight P/E premium, Masimo stock trades at 26.5X forward earnings compared to its Zacks Medical-Instruments Industry average of 23.5X, with some noteworthy peers being Sonova Holding (SONVY - Free Report)  and Alcon Inc. (ALC - Free Report)

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Bottom Line

Seeing a nice spike in their EPS revisions over the last 60 days, Collegium and Masimo have become viable options in the portfolio for growth and value. Of course, the medical sector can also serve as a viable defensive hedge when market volatility arises, making these highly ranked stocks more attractive with the broader indexes near all-time highs.

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