Top 5 Mental Health Stocks To Watch In 2023
*The past decade has seen a major increase in mental health awareness world-wide. There have been many reasons for this, including celebrities and high-profile individuals sharing their struggles with mental health publicly. Social media users – especially Gen Z and Millennials – increasingly talk about mental health online.
Businesses and investors are increasingly putting their money to mental health start-ups. There’s also been a rise in the adoption of Mental Health Awareness Months in countries around the world. In 2015, the World Health Organisation (WHO) incorporated mental health in their Sustainable Development Goals. At the same time, the WHO found that mental health conditions have increased worldwide. Depression is now the leading cause of disability worldwide, while suicide is the fourth leading cause of death among 15-29 year olds. A 2017 study estimated that 792 million people lived with a mental health disorder - that’s about one in 10 people globally.
Covid-19 worsened much of the populations’ mental health, while some individuals developed mental health issues for the first time during the pandemic.
Why mental health stocks?
The mix of rising mental health issues coupled with increased awareness about the importance of mental wellbeing makes mental health stocks a promising investment in 2023.
Mental health stocks are a broad umbrella that covers pharmaceutical companies that sell medicines that treat mental illness, companies that offer novel approaches to therapy, companies with guides to mental wellness, companies with new disruptive innovations for mental wellbeing, and more.
Here are the mental health stocks that you should consider in 2023:
Compass Pathways stock
Compass Pathways (NASDAQ: CMPS) is a US publicly traded medical care facilities business. It develops synthetic psilocybin (a psychedelic prodrug compound found naturally in psychedelic mushrooms) into antidepressants.
Compass Pathways aims to cure treatment resistant depression (TRD). They’re operating in a big growth area with the global market for TRD therapies expected to reach $1.39 billion by 2027. As The Motley Fool points out, if Compass Pathways managed to capture even 10% of that market per annum, it would be bringing in $139 million in revenue.
Psychedelics like psilocybin have been hailed as the next big thing in mental health care, meaning Compass Pathways is well ahead of the curve. Many also hail the company as being at the forefront of psilocybin research. Moreover, psilocybin may be able to treat other illnesses as well, and Compass Pathways is expanding their research into post-traumatic stress disorder and anorexia nervosa. They spent $15.4 million on research and development this year, compared with $6.9 million during the same period in 2021.
Although Compass Pathways reported a net loss of $21.2 million in the first quarter of 2022, or $0.50 loss per share, Four Wall Street analysts have issued a 12-month price target for Compass Pathways. Compass Pathways currently has a Zacks Rank #2 (Buy). This is a stock worth looking at.
Teladoc Health Inc stock
Teladoc (NYSE: TDOC) provides telehealth services to the public – video or phone appointments between a patient and their doctor or medical health practitioner. This increases access and convenience for patients. Telehealth has been hailed as the future of medical care, and the global telehealth market is expected to reach $89.3 billion.
This US company got a big boost when it was incorporated in Amazon’s virtual assistant technology, Alexa – thus providing voice activated virtual medical health care to users. New York’s largest healthcare provider, Northwell Health, partnered with Teladoc in April this year to improve nationwide virtual care in the US.
While consumers are increasingly adopting telehealth services, the biggest boost to Teladoc will be its business-to-business offerings. In other words, selling its services to entire companies for use for their employees, rather than to individual users.
Teladoc’s stock has been down 60% to date, but analysts predict a positive uptick. Risk tolerant traders with a long-term view will want to look at this stock.
Acadia Healthcare Company Inc Stock
US-based Acadia Health Company Inc (NASDAQ: ACHC) runs 600 behavioural health care facilities in the US, UK and Puerto Rico. These include residential treatment centres, psych hospitals, outpatient clinics and therapeutic school-based programmes. They’re worth an estimated $7.5 billion, and their stocks are currently trading at $82.61 at the time of writing.
Acadia Healthcare stock is worth looking at due to its momentum. It’s been up 36.1% so far in 2022 and has a Momentum Score of B, meaning this is a stock that’s rising and is expected to keep rising. Acadia Healthcare got a Zacks 2 (Buy) ranking.
ATAI Life Sciences stock
German biopharmaceutical company ATAI Life Sciences (NASDAQ: ATAI) aims to treat mental illness with psychedelics. Founded in 2018, the company creates, invests, and buys businesses that develop psychedelic therapies (ATAI holds a 20.8% share in Compass Pathways).
Their aim is to advance treatment for TRD, opioid use disorder, generalised anxiety disorder and post traumatic stress disorder. The company has had celebrity investors, including UK singer Liam Payne, US deejay Diplo and US entrepreneur Steven Bartlett, and has gained media attention due to its focus of ”treating the patient and not the disease.”
ATAI stock has faced historical market volatility. Nevertheless, eight Wall Street analysts have deemed ATAI a Strong Buy. Yahoo! Finance noted that while ATAI has a cash burn of $73 million in the 12 months they analysed, they have a cash runway of 4.6 years – meaning they have time to develop the business.
Eli Lilly And Co stock
Pharmaceutical heavyweight Eli Lilly And Company (NYSE: LLY) is headquartered in the US and operates in 19 countries. The third largest drug manufacturer in the world, it produces two of the globe’s most prescribed antidepressants – Prozac and Cymbalta. Eli Lilly distributes in approximately 125 countries.
Eli Lilly growth this year came off the back of new diabetes drugs Trulicity and Humalog, as well as producing Covid-19 antibodies. Eli Lilly grew by 17% in the last annum, and a great deal of that is attributed to creating antibodies. Eli Lilly stock has been up by 300% in the last 5 years, and they made $7.8 billion in revenue in the last quarter. They invest heavily in research and development and acquisitions, which mitigates sales losses when drug patents expire.
Some analysts believe that Eli Lilly cannot sustain its unstoppable share price progress. However, 15 out of 18 analysts polled by Market Beat had a ‘buy’ call for Eli Lilly stock and three recommended a ‘hold’. Machine-learning forecasting service GovCapital predicts Eli Lilly’s stock price will continue its upward trajectory in the long-term. Stock is expected to reach $925.734 by end December 2025.