From novel pharmaceuticals to telemedicine, most healthcare companies are on a mission to drive better patient outcomes. Players catalyzing medical advancements have benefited from elevated demand, and their momentum is only rising as the industry has posted a 23.7% gain over the past six months, beating the S&P 500 by 13.6 percentage points.
Nevertheless, investors should tread carefully as the sector is heavily regulated, and businesses can be negatively impacted if the rules change. On that note, here are three healthcare stocks best left ignored.
Moderna (MRNA)
Market Cap: $16.34 billion
Rising to global prominence during the COVID-19 pandemic with one of the first effective vaccines, Moderna (NASDAQ: MRNA) develops messenger RNA (mRNA) medicines that direct the body's cells to produce proteins with therapeutic or preventive benefits for various diseases.
Why Do We Avoid MRNA?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 50.5% annually over the last two years
- 215.1 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
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $41.82 per share, Moderna trades at 8.6x forward price-to-sales. If you’re considering MRNA for your portfolio, see our FREE research report to learn more.
STAAR Surgical (STAA)
Market Cap: $1.04 billion
With over 2.5 million implants performed worldwide, STAAR Surgical (NASDAQ: STAA) designs and manufactures implantable lenses that correct vision problems without removing the eye's natural lens.
Why Are We Out on STAA?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Free cash flow margin dropped by 37.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Waning returns on capital imply its previous profit engines are losing steam
STAAR Surgical is trading at $21.14 per share, or 41.6x forward P/E. Dive into our free research report to see why there are better opportunities than STAA.
Agilent (A)
Market Cap: $39.59 billion
Originally spun off from Hewlett-Packard in 1999 as its measurement and analytical division, Agilent Technologies (NYSE: A) provides analytical instruments, software, services, and consumables for laboratory workflows in life sciences, diagnostics, and applied chemical markets.
Why Does A Worry Us?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- 3.9 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
Agilent’s stock price of $139.81 implies a valuation ratio of 24.4x forward P/E. To fully understand why you should be careful with A, check out our full research report (it’s free).
Stocks We Like More
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The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
