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5 Healthcare Stocks to Buy Despite a Clinton Victory
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As the race for the presidency enters its last lap, Hillary Clinton has emerged as the clear favorite. Going by the Real Clear Politics poll average, Clinton is leading Donald Trump by more than six points as of now. Market watchers and analysts alike are now examining the implications of a Clinton presidency for various sectors of the economy.
Given her stand on healthcare and the biotech industry in particular, it comes as no surprise that investors have become increasingly wary of such stocks. However, the sector’s inherent appeal remains intact despite the troubled waters it has traversed recently. Picking healthcare stocks despite a Clinton win could be a profitable play after all.
Would Healthcare Companies Be Badly Hit?
Most of the pharma industry’s apprehensions related to a Clinton presidency are related to her stated position on drug overpricing. However, the fear that a Clinton presidency would lead to industry wide price controls on drugs may be widely exaggerated, according to analysts at Credit Suisse .
Clinton and Donald Trump are both in favor of giving Medicare the freedom to negotiate with drugmakers directly on prices of prescription drugs. But such a scenario is highly unlikely given the resistance that President Obama has faced in his multiple attempts at giving Medicare bargaining power. Meanwhile, the pharma industry supports a different approach to fix pricing. This model envisages prices being set according to a drug’s performance.
For instance, a drug could be initially provided at lower cost and prescription plans would later pay higher amounts if the medication succeeds in achieving preset goals. Several companies such as Eli Lily (LLY - Free Report) , Merck (MRK - Free Report) and Amgen (AMGN - Free Report) have already struck such deals where performance determines pricing.
Sector Prospects Remain Bright
Given the challenges on the drug pricing front, investors are now betting on other stock categories which could be better bets. Medical technology, life science tools and service providers have replaced biotech stocks as industry favorites.
Companies such as Thermo Fisher (TMO - Free Report) and Illumina (ILMN - Free Report) are riding the genomic analysis wave and have begun offering products with applications ranging from cattle breeding to oncology. Meanwhile, Medtronic (MDT - Free Report) and Edwards Lifesciences (EW - Free Report) are poised to gain from there cardiovascular therapy products which is emerging as one of the most innovative therapeutic areas.
At the same time, healthcare stocks remain great defensive options during a period of economic uncertainty and looming geopolitical risks. A spate of mergers and options, primarily in the biotech space, is likely to spark off further investor interest. The fact that Pfizer (PFE - Free Report) paid $14 billion to buy Medivation MDVN shows that the eagerness of larger companies to acquire smaller industry players. This trend is likely to continue in the near future.
Our Choices
Despite the near certainty that Clinton will win the presidential election next month, it’s not all doom and gloom for healthcare stocks. In fact a section of market watchers are even predicting a biotech “relief rally.”
But given the uncertainty which hangs over this particular set of stocks, it may a good idea to pick up other options from within the healthcare industry. However, picking winning stocks may prove to be difficult.
This is where our VGM score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.
AngioDynamics Inc. (ANGO - Free Report) designs, manufactures and sells a wide range of medical, surgical and diagnostic devices.
AngioDynamics has a Zacks Rank #1 and a VGM Score of A. The company has expected earnings growth of 12.9% for the current year. Its earnings estimate for the current year has improved by 3.2% over the last 30 days.
WellCare Health Plans, Inc. WCG is a provider of managed care services targeted exclusively to government-sponsored healthcare programs, focusing on Medicaid and Medicare.
WellCare Health Plans has a Zacks Rank #1 and a VGM Score of A. The company has expected earnings growth of 46.2% for the current year. Its earnings estimate for the current year has improved by 0.4% over the last 30 days.
Surgery Partners, Inc. SGRY is an operator of surgical facilities located in the U.S.
Surgery Partners has VGM Score of A. The company has expected earnings growth of 90.6% for the current year. Its earnings estimate for the current year has improved by 1% over the last 30 days. The stock has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UnitedHealth Group Inc. (UNH - Free Report) is a diversified health and well-being company. It has been consistently gaining from robust Medicaid and Medicare businesses.
UnitedHealth has a Zacks Rank #2 and a VGM Score of A. The company has expected earnings growth of 24.2% for the current year. Its earnings estimate for the current year has improved by 1.2% over the last 30 days.
Boston Scientific Corp. (BSX - Free Report) manufactures medical devices and products used in various interventional medical specialties worldwide.
Boston Scientific has a Zacks Rank #2 and a VGM Score of B. The company has expected earnings growth of 18.3% for the current year. Its earnings estimate for the current year has improved by 0.1% over the last 30 days.
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5 Healthcare Stocks to Buy Despite a Clinton Victory
As the race for the presidency enters its last lap, Hillary Clinton has emerged as the clear favorite. Going by the Real Clear Politics poll average, Clinton is leading Donald Trump by more than six points as of now. Market watchers and analysts alike are now examining the implications of a Clinton presidency for various sectors of the economy.
Given her stand on healthcare and the biotech industry in particular, it comes as no surprise that investors have become increasingly wary of such stocks. However, the sector’s inherent appeal remains intact despite the troubled waters it has traversed recently. Picking healthcare stocks despite a Clinton win could be a profitable play after all.
Would Healthcare Companies Be Badly Hit?
Most of the pharma industry’s apprehensions related to a Clinton presidency are related to her stated position on drug overpricing. However, the fear that a Clinton presidency would lead to industry wide price controls on drugs may be widely exaggerated, according to analysts at Credit Suisse .
Clinton and Donald Trump are both in favor of giving Medicare the freedom to negotiate with drugmakers directly on prices of prescription drugs. But such a scenario is highly unlikely given the resistance that President Obama has faced in his multiple attempts at giving Medicare bargaining power. Meanwhile, the pharma industry supports a different approach to fix pricing. This model envisages prices being set according to a drug’s performance.
For instance, a drug could be initially provided at lower cost and prescription plans would later pay higher amounts if the medication succeeds in achieving preset goals. Several companies such as Eli Lily (LLY - Free Report) , Merck (MRK - Free Report) and Amgen (AMGN - Free Report) have already struck such deals where performance determines pricing.
Sector Prospects Remain Bright
Given the challenges on the drug pricing front, investors are now betting on other stock categories which could be better bets. Medical technology, life science tools and service providers have replaced biotech stocks as industry favorites.
Companies such as Thermo Fisher (TMO - Free Report) and Illumina (ILMN - Free Report) are riding the genomic analysis wave and have begun offering products with applications ranging from cattle breeding to oncology. Meanwhile, Medtronic (MDT - Free Report) and Edwards Lifesciences (EW - Free Report) are poised to gain from there cardiovascular therapy products which is emerging as one of the most innovative therapeutic areas.
At the same time, healthcare stocks remain great defensive options during a period of economic uncertainty and looming geopolitical risks. A spate of mergers and options, primarily in the biotech space, is likely to spark off further investor interest. The fact that Pfizer (PFE - Free Report) paid $14 billion to buy Medivation MDVN shows that the eagerness of larger companies to acquire smaller industry players. This trend is likely to continue in the near future.
Our Choices
Despite the near certainty that Clinton will win the presidential election next month, it’s not all doom and gloom for healthcare stocks. In fact a section of market watchers are even predicting a biotech “relief rally.”
But given the uncertainty which hangs over this particular set of stocks, it may a good idea to pick up other options from within the healthcare industry. However, picking winning stocks may prove to be difficult.
This is where our VGM score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.
AngioDynamics Inc. (ANGO - Free Report) designs, manufactures and sells a wide range of medical, surgical and diagnostic devices.
AngioDynamics has a Zacks Rank #1 and a VGM Score of A. The company has expected earnings growth of 12.9% for the current year. Its earnings estimate for the current year has improved by 3.2% over the last 30 days.
WellCare Health Plans, Inc. WCG is a provider of managed care services targeted exclusively to government-sponsored healthcare programs, focusing on Medicaid and Medicare.
WellCare Health Plans has a Zacks Rank #1 and a VGM Score of A. The company has expected earnings growth of 46.2% for the current year. Its earnings estimate for the current year has improved by 0.4% over the last 30 days.
Surgery Partners, Inc. SGRY is an operator of surgical facilities located in the U.S.
Surgery Partners has VGM Score of A. The company has expected earnings growth of 90.6% for the current year. Its earnings estimate for the current year has improved by 1% over the last 30 days. The stock has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UnitedHealth Group Inc. (UNH - Free Report) is a diversified health and well-being company. It has been consistently gaining from robust Medicaid and Medicare businesses.
UnitedHealth has a Zacks Rank #2 and a VGM Score of A. The company has expected earnings growth of 24.2% for the current year. Its earnings estimate for the current year has improved by 1.2% over the last 30 days.
Boston Scientific Corp. (BSX - Free Report) manufactures medical devices and products used in various interventional medical specialties worldwide.
Boston Scientific has a Zacks Rank #2 and a VGM Score of B. The company has expected earnings growth of 18.3% for the current year. Its earnings estimate for the current year has improved by 0.1% over the last 30 days.
Confidential from Zacks
This week, Zacks researchers have named 7 other stocks that look to break out even sooner than today's Bull of the Day. You can see these time-sensitive tickers free, and access additional trades that are not available to the public. Simply click here>>