A Look at Fortune's Health Care Picks for 2013 (ALGN, FMS, GILD)

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Three of
Fortune's top 10 stock picks for 2013
are health care related companies. But they are not in big names in the sector, such as Johnson & Johnson
JNJ
or Pfizer
PFE
. They were Align Technology
ALGN
, Fresenius Medical Care
FMS
and Gilead Sciences
GILD
. Here is a quick look at how these three picks have performed recently and what analysts expect from them.
Align Technology
This San Jose, California-based maker of dental and orthodontic devices has a market capitalization of near $2.1 billion. The long-term earnings per share (EPS) growth forecast is more than 17 percent and the operating margin is much than the industry average. But the price-to-earnings (P/E) ratio is higher than the industry average as well. And short interest is about 10 percent of the float, though that is the lowest it has been since May. Eight of the 12 analysts surveyed by Thomson/First Call who follow the stock recommend buying shares, six of them rating it at Strong Buy. The mean price target, or where analysts expect the stock to go, is almost 22 percent higher than the current share price, though still less than the multiyear high reached in September. Shares dropped more than 25 percent in mid October following disappointing guidance, and have yet to recover. Because of that drop, the stock has underperformed DENTSPLY International
XRAY
and the broader markets over the past six months.
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Fresenius Medical Care
This German kidney dialysis company operates about 2,900 clinics in approximately 40 countries. It has a market cap of more than $21 billion and a dividend yield of less than one percent. The long-term EPS growth forecast is more than 10 percent, though EPS fell short of consensus estimates in two of the past four quarters. The return on equity is more than 15 percent. Only three of the five analysts surveyed recommend buying shares, but none recommend selling. But their mean price target represents almost seven percent potential upside, though that is less than the 52-week high reached in October. Shares are trading in the same neighborhood as at the the beginning of the year, despite starting to recover from a steep pullback in October as Hurricane Sandy bore down on the East Coast. The stock has underperformed competitors Baxter
BAX
and DaVita
DVA
over the past six months, but has been in line with the S&P 500.
Gilead Sciences
This biopharmaceutical company is headquartered in Foster City, California and sports a market cap of about $56 billion. The P/E ratio is lower than the industry average and the long-term EPS growth forecast is more than 17 percent. The operating margin is better than the industry average and the return on average is more than 33 percent. All but four or the 29 analysts surveyed recommend buying shares; 11 of them rate it at Strong Buy. They believe the stock has some room to run as their mean price target is more than 10 percent higher than the current share price. That would be a multiyear high. Shares have pulled back about three percent from the current multiyear high but are still about 90 percent higher than a year ago. Over the past six months, the stock has outperformed larger competitors GlaxoSmithKline
GSK
and Pfizer, as well as the broader markets.
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Posted In: Long IdeasShort IdeasTrading IdeasAlign TechnologybaxterDavitadentsplyFresenius Medical CareGilead SciencesglaxosmithklineJohnson & JohnsonPfizer
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