3 Healthcare Stocks We Steer Clear Of
Petr Huřťák
Thu, August 27, 2026 at 8:03 PM GMT+5:30
3 min read
From novel pharmaceuticals to telemedicine, most healthcare companies are on a mission to drive better patient outcomes. Shareholders who bet on the industry have been rewarded lately as healthcare stocks have returned 24.9% over the past six months, topping the S&P 500 by 13.3 percentage points
Regardless of these results, investors must exercise caution as many businesses in this space are subject to heavy regulation that can influence their earnings potential. Keeping that in mind, here are three healthcare stocks we’re passing on
Bausch + Lomb (BLCO)
With a nearly 170-year history dedicated to vision care and eye health innovation, Bausch + Lomb (NYSE:BLCO) develops and manufactures a comprehensive range of eye health products including contact lenses, pharmaceuticals, surgical devices, and consumer eye care solutions
Why Do We Think Twice About BLCO?
Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
7.6 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
ROIC of 1.5% reflects management’s challenges in identifying attractive investment opportunities
Bausch + Lomb is trading at $16.98 per share, or 16.9x forward P/E. Check out our free in-depth research report to learn more about why BLCO doesn’t pass our bar
Envista (NVST)
Market Cap: $4.41 billion
Uniting more than 30 trusted brands including Nobel Biocare, Ormco, and DEXIS under one corporate umbrella, Envista Holdings (NYSE:NVST) is a global dental products company that provides equipment, consumables, and specialized technologies for dental professionals
Why Do We Think NVST Will Underperform?
Sales trends were unexciting over the last five years as its 3.4% annual growth was below the typical healthcare company
Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 7% annually
Negative returns on capital show that some of its growth strategies have backfired, and its decreasing returns suggest its historical profit centers are aging
At $27.78 per share, Envista trades at 17.5x forward P/E. Read our free research report to see why you should think twice about including NVST in your portfolio, it’s free
Progyny (PGNY)
Market Cap: $1.98 billion
Pioneering a data-driven approach to family building that has achieved an industry-leading patient satisfaction score of +80, Progyny (NASDAQ:PGNY) provides comprehensive fertility and family building benefits solutions to employers, helping employees access quality fertility treatments and support services
