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Credit Suisse Initiates Coverage of Large Health Care Stocks

- By Alberto Abaterusso

Analysts at Credit Suisse Group AG (CS) took action on large health care stocks on Tuesday.

Credit Suisse initiated coverage of Abbott Laboratories (ABT), Boston Scientific Corp. (BSX), Medtronic PLC (MDT), Stryker Corp. (SYK), Baxter International Inc. (BAX) and Edwards Lifesciences Corp. (EW) with an outperform rating.

The Swiss bank also initiated coverage of Zimmer Biomet Holdings Inc. (ZBH) with an underperform rating.


The table below shows Credit Suisse's price target for each of the health care stocks, the percentage of upside or downside the target price represents from the closing share price on Tuesday, the average target price and the mean recommendation rating.

The chart below illustrates the trend in the share price of each stock this year.

The table below shows the market capitalization, the 52-week range, the price-book ratio, the price-sales ratio and the price-earnings ratio for each health care stock.

Stock

Market cap

52-week range ($)

Price-book ratio

Price-sales ratio

Price-earnings ratio

Abbott Laboratories

$123.08B

55.42 - 74.92

4.01

4.07

146

Boston Scientific

$47.48B

24.79 - 39.44

5.73

4.96

73

Medtronic

$123.56B

76.41 - 100.15

2.51

4.12

55.76

Stryker

$60.42B

146.80 - 179.84

6.13

4.63

49.84

Baxter International

$34.65B

61.05 - 78.38

3.81

3.24

29.46

Edwards Lifesciences

$32.62B

110.68 - 175.00

9.71

9.21

46.86

Zimmer Biomet Holdings

$21.58B

104.28 - 134.55

1.76

2.72

12.33



Based on the price-earnings ratio in relation to the Peter Lynch value of 15, it appears most of the stocks are overvalued. Only Zimmer Biomet is undervalued.

In addition, Abbott has a forward dividend yield of 1.84%. Medtronic's yield is 2.18%, Stryker is 1.30%, Baxter International has a 1.18% yield and Zimmer Biomet Holdings yields 0.90%. The industry median for most of these stocks is 1.48%. Baxter International's industry has a forward dividend yield of 1.3%.

Boston Scientific and Edwards Lifesciences do not pay dividends.

Disclosure: I have no positions in any securities mentioned in this article.

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This article first appeared on GuruFocus.