1 Healthcare Stock to Consider Right Now and 2 We Turn Down

Barchart·03/25/2026 02:32:15

Personal health and wellness is one of the many secular tailwinds for healthcare companies. Those leading the charge have not only realized strong financial performance but also propelled the broader industry’s returns as healthcare stocks have gained 4.4% over the past six months. This was a good place to be as the S&P 500 was stuck in neutral.

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. Taking that into account, here is one healthcare stock boasting a durable advantage and two we’re passing on.

Two Healthcare Stocks to Sell:

Merit Medical Systems (MMSI)

Market Cap: $4.01 billion

Founded in 1987 and now offering over 1,700 patented products across global markets, Merit Medical Systems (NASDAQ:MMSI) manufactures and markets specialized medical devices used in minimally invasive procedures for cardiology, radiology, oncology, critical care, and endoscopy.

Why Are We Wary of MMSI?

1. Subscale operations are evident in its revenue base of $1.52 billion, meaning it has fewer distribution channels than its larger rivals
2. Low returns on capital reflect management’s struggle to allocate funds effectively

Merit Medical Systems is trading at $67.53 per share, or 16.8x forward P/E. If you’re considering MMSI for your portfolio, see our FREE research report to learn more.

Fortrea (FTRE)

Market Cap: $895.7 million

Spun off from Labcorp in 2023 to focus exclusively on clinical research services, Fortrea (NASDAQ:FTRE) is a contract research organization that helps pharmaceutical, biotech, and medical device companies develop and bring their products to market through clinical trials and support services.

Why Do We Think FTRE Will Underperform?

1. Sales tumbled by 2.9% annually over the last four years, showing market trends are working against its favor during this cycle
2. Push for growth has led to negative returns on capital, signaling value destruction, and its decreasing returns suggest its historical profit centers are aging
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

Fortrea’s stock price of $9.59 implies a valuation ratio of 13.8x forward P/E. Check out our free in-depth research report to learn more about why FTRE doesn’t pass our bar.

One Healthcare Stock to Watch:

Phibro Animal Health (PAHC)

Market Cap: $2.25 billion

With a portfolio of approximately 800 product lines serving farmers and veterinarians in 90 countries, Phibro Animal Health (NASDAQ:PAHC) develops, manufactures, and markets health products for livestock and companion animals, including antibacterials, vaccines, nutritional supplements, and mineral additives.

Why Does PAHC Stand Out?

1. Annual revenue growth of 21.7% over the last two years was superb and indicates its market share increased during this cycle
2. Operating profits and efficiency rose over the last two years as it benefited from some fixed cost leverage
3. Earnings per share grew by 16.4% annually over the last five years, massively outpacing its peers

Phibro Animal Health trades at a stock price of $56.69. Is now the right time to buy? Find out in our full research report, it’s free.

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