We recently compiled a list of the 10 Best Mid-Cap Healthcare Stocks To Buy Now.In this article, we are going to take a look at where Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX) stands against the other mid-cap healthcare stocks.
Global Healthcare Market: Growth Projections, Challenges, and Tech-Driven Innovations
According to projections by ReportLinker, the market for healthcare services will increase from $7.5 trillion in 2022 to $7.975 trillion in 2023. Through 2027, it is projected to grow at a compound annual growth rate (CAGR) of 6.3%, or $9.8 trillion. Hospitals, digital health, and healthcare services are some of the segments that make up the global healthcare market. Between 2024 and 2029, the hospital market alone is expected to increase by 4.18% annually, reaching a market value of $5.19 trillion.
In December 2023, the World Health Organization reported that global healthcare spending hit a record $9.8 trillion in 2021, or 10.3% of global GDP. However, spending was unevenly distributed, with low-income countries experiencing a decline in government health spending, relying more on external aid. While 11% of the global population lived in countries spending less than $50 per person on health, high-income countries spent around $4,000 per capita. Despite rising public health spending during COVID-19, this growth is unlikely to continue as countries face economic challenges like slow growth, high inflation, and increased debt.
Dr Bruce Aylward, WHO Assistant Director-General, Universal Health Coverage, Life Course, said:
“Sustained public financing on health is urgently needed to progress towards universal health coverage. It is especially critical at this time when the world is confronted by the climate crisis, conflicts, and other complex emergencies. People’s health and well-being need to be protected by resilient health systems that can also withstand these shocks.”
The Centers for Medicare and Medicaid Services (CMS) estimates that national healthcare expenditures would grow at an average rate of 5.6% between 2027 and 2032, with spending on healthcare expected to reach an estimated $4.8 trillion in 2023.
The healthcare market is undergoing a tech-driven, patient-centered revolution. Telehealth, boosted by the pandemic, is now mainstream, with the global market valued at $60.15 billion in 2023 and expected to grow steadily. Precision medicine, driven by genomics, is set to become a $50.2 billion market by 2028, offering personalized treatments based on genetic makeup. AI is also transforming healthcare, with $31.5 billion in equity funding from 2019 to 2022 and potential annual US savings of $360 billion within five years. Remote patient monitoring (RPM) is rising, with the global market at $71.9 billion in 2023 and projected to grow, supported by wearable technology.
Our Methodology
In our methodology, we focused on selecting healthcare stocks with market capitalizations between $2 billion and $10 billion that also had a strong/moderate buy rating and high institutional ownership. After identifying these stocks, we ranked them in ascending order based on their number of hedge fund holders as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A doctor and a patient discussing the success of the clinical trial for a new nonpeptide somatostatin receptor agonist.
Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX) a mid-cap biotech company, develops small-molecule drugs for rare endocrine disorders and endocrine-related tumors. Crinetics' primary catalyst is the progression of its drug candidates through clinical trials. The company's lead product, paltusotine, is being developed for the treatment of acromegaly and neuroendocrine tumors. Positive trial results could significantly boost investor confidence and stock value. Crinetics recently announced positive initial findings from two ongoing, open-label studies for atumelnant in the treatment of Congenital Adrenal Hyperplasia (CAH) and ACTH-Dependent Cushing's Syndrome (ADCS). The company reported that 100% of participants with CAH maintained normal or near-normal hormone levels.
Marc Wilson, the Cheif Financial Officer of Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX) said in Q2 earnings call transcript:
“Crinetics continues to be in a strong financial position, having ended the second quarter with approximately $863 million in cash and investments. Our solid financial foundation is projected to fund our current operating plan into 2028. This includes plans to commercialize paltusitine for acromegaly, the initiation of multiple later-stage clinical trials in additional indications with paltusitine and Atumelnant, as well as continued investment in our pipeline. Concerning the second quarter financial results, research and development expenses were $58.3 million for the quarter end of June 30th, 2024, compared to $40.6 million for the same period in 2023. The increase was primarily attributable to higher personnel costs and manufacturing and development activities, both of which were driven by the advancement of our clinical programs and the expansion of our preclinical portfolio. For the quarter ended June 30th, 2024, General and Administrative expenses were $24.8 million compared to $13.3 million for the same period in 2023. The change was primarily due to an increase in personnel costs and an increase in outside services as we continue to build the infrastructure to support our growing pipeline.”
As of Q2 2024, around 44 hedge fund holders held stakes in the stock with Driehaus Capital being the largest stakeholder in the stock with 6,112,173 shares worth $273,764,229. The stock holds a Strong Buy rating based on 11 Wall Street Analysts. The average price target is $70.09, ranging from $54.00 to $97.00, indicating a 32.10% increase from the current price of $53.06.
Overall CRNX ranks 3rd on our list of the best mid-cap stocks to buy. While we acknowledge the potential of CRNX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CRNX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
