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A Fast-Growing Slice of the Healthcare Sector for Your Radar

Life science and diagnostics firms offer attractive growth and moats, but be wary of valuations.

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Michael Waterhouse: From a growth and economic moat perspective, we think the life science and diagnostic tools manufacturers have a lot to offer investors. Depending on their niche market exposure, we think most companies can sustain mid-single to high-single-digit growth, with the highest growth for firms having material sales from R&D and bioprocessing spending among biopharma customers as well as firms with molecular and genomic testing products. 

We also think many firms in this space benefit from economic moats, including wide-moat Waters and Agilent, thanks to intangibles and switching costs around their large installed bases of analytical instruments in liquid and gas chromatography. 

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Michael Waterhouse does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.