Buy Stock in These Healthcare Leaders as Q1 Earnings Approach? ABBV, HCA

Due to the essentiality of healthcare, the medical sector can provide a defensive hedge against market uncertainty, and investors may be eyeing AbbVie ABBV and HCA Healthcare HCA stock ahead of their Q1 reports on Friday, April 25.

Being the largest non-governmental operator of acute care hospitals in the United States, HCA shares are up a very respectable +11% year to date, with pharmaceutical giant AbbVie’s stock virtually flat but outperforming the benchmark S&P 500’s 10% decline as well. That said, the broader market’s return of nearly +30% has still topped these healthcare leaders over the last two years, making it a worthy topic of whether ABBV and HCA should have a spot in the portfolio.   

AbbVie & HCA’s Q1 Expectations

Providing popular immunology drugs such as Skyrizi and Rinvoq, AbbVie’s Q1 sales are thought to have increased 5% year over year to $12.91 billion. On the bottom line, Q1 EPS is expected at $2.42, a 5% increase from $2.31 per share a year ago. Notably, AbbVie has reached or exceeded the Zacks EPS Consensus for 24 consecutive quarters with an average earnings surprise of 2.37% in its last four quarterly reports.

Benefitting from its vast networks of hospitals and outpatient facilities, HCA Healthcare’s Q1 sales are also expected to be up 5% to $18.31 billion. Plus, Q1 EPS is projected to rise 7% to $5.77 versus $5.36 a share in the comparative quarter. HCA Healthcare has surpassed earnings expectations for five straight quarters, with an average EPS surprise of 5.86% in its last four quarterly reports.

AbbVie & HCA’s Attractive P/E Valuations

Seeing as AbbVie and HCA Healthcare are expected to post double-digit EPS growth in fiscal 2025 and FY26, what may appeal to long-term investors is their attractive P/E valuations. Both trade under the benchmark’s 20.4X forward earnings multiple, with ABBV at 14.1X and HCA at 12.9X.

AbbVie & HCA’s Reliable Dividends

More appealing to consider ABBV and HCA stock in the portfolio is their reliable dividends, with AbbVie being a dividend king and increasing its dividend for more than 50 consecutive years (53). Furthermore, AbbVie’s 3.77% annual dividend yield towers over the S&P 500’s 1.4% average, with HCA Healthcare’s yield at 0.89%.

While HCA Healthcare is yet to reach the illustrious dividend king or aristocratic title, it has increased its dividend seven times in the last five years with an annualized growth rate of 17.38% during this period. Most intriguing is that HCA has a payout ratio of just 12%, suggesting there is an abundance of room to increase its payout in the future.

Conclusion & Final Thoughts

At the moment, AbbVie and HCA Healthcare stock land a Zacks Rank #3 (Hold) as their Q1 results may be critical to more upside and reconfirming their appealing growth trajectories. These medical stocks appear to offer long-term value to shareholders at their current levels and are certainly worth holding in the portfolio, although there could still be better buying opportunities ahead.

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This article originally published on Zacks Investment Research (zacks.com).

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