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Quite a few top-rated stocks out of the Zacks Medical sector have highlighted this week’s earnings lineup with now appearing to be an ideal time to buy.

Following their favorable quarterly results this week here are three intriguing healthcare stocks that investors will want to consider.

Exelixis (EXEL)

Exelixis is an oncology-focused biotech company that is starting to check the boxes in terms of both its growth and valuation. With a concentration on new drugs for the treatment of challenging cancers Exelixis' Q4 earnings of $0.33 a share beat expectations by 6% on Tuesday despite sales of $479.65 million slightly missing estimates of $481.23 million.

Still, Q4 earnings climb swinged from an adjusted loss of -$0.03 a share in the prior year quarter with sales rising 14% year over year. More importantly, Exelixis has started to confirm the anticipation of high double-digit EPS growth in fiscal 2024 while trading at a very reasonable 13.6X forward earnings multiple. Notably, Exelixis’ stock is up +13% in the last year and the Average Zacks Price Target of $27.22 a share still suggests a 35% upside.

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Encompass Health (EHC)

Integrated healthcare services provider Encompass Health is attractive after surpassing its Q4 top and bottom line expectations on Wednesday. As an operator of rehabilitation hospitals throughout the United States, Encompass Health’s Q4 earnings of $0.95 a share topped the Zacks Consensus of $0.83 a share by 14%. Fourth quarter earnings were up 8% YoY with Q4 sales of $1.24 billion rising 9% from $1.13 billion in the comparative quarter and topping estimates by roughly 1%.

EHC shares are up +20% over the last year and Encompass Health has now surpassed earnings expectations for five consecutive quarters posting an average earnings surprise of 20% in its last four quarterly reports.

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McKesson (MCK)

Last but not least is McKesson with the health care services and information technology giant posting strong results for its fiscal third quarter on Wednesday. Driven by stronger sales in its U.S. Pharmaceutical segment, McKesson posted Q3 earnings of $7.74 per share which came in 10% better than expected. Third-quarter earnings rose 12% YoY with quarterly sales of $80.98 billion jumping 15% from the comparative quarter and topped estimates by 4%.

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McKesson has surpassed earnings expectations for five consecutive quarters with it being noteworthy that the company raised its FY24 EPS guidance to $27.25-$27.65 from $26.80-$27.40. Reconfirming that its expansive and robust bottom line is secure makes McKesson’s stock very attractive as MCK shares have climbed +34% over the last year but still trade at a reasonable 18.9X forward earnings multiple.

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Bottom Line

Strong quarterly results have continued to make Exelixis, Encompass Health, and McKesson stand out among the Zacks Medical sector. All three land a Zacks Rank #2 (Buy) and remain a few of the more promising healthcare stocks to consider at the moment. 

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