2 Beaten-Down Healthcare Stocks That Could Soar in the Fourth Quarter

In a market where the S&P 500 has gained 13.8% this year, healthcare stocks such as Danaher (DHR) and GE Healthcare Technologies (GEHC) have underperformed, with both experiencing declines of nearly 2.7% and 16.7% respectively. Despite these setbacks, both companies present an opportunity for investors, as they are expected to report strong third-quarter earnings.

Danaher's forward price-to-earnings (PE) ratio is significantly lower than its historical PE ratios, suggesting an undervalued stock with potential upside. Similarly, GE Healthcare Technologies' forward PE ratio is lower than its recent levels, indicating a possible gain for investors if the company meets expectations. The key to both companies' potential success lies in their ability to address operational challenges and deliver on their adjusted earnings guidance.

For Danaher, confirming that bioprocessing shipments were affected by timing issues rather than ongoing destocking is crucial. Management's strategic review of the Patient Care Solutions segment, coupled with expected margin improvement, could also positively impact the stock. Meanwhile, GE Healthcare's higher pricing, new product introductions, and productivity actions in the first half of the year may help the company meet its adjusted earnings per share and EBIT margin targets.

As both companies report their third-quarter earnings, investors will closely monitor whether they can capitalize on these opportunities and deliver strong results.