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November was a great month for pharma/biotech stocks after a rather difficult year when the industry struggled with media and political focus on high drug prices.
The pharma/biotech industry responded favorably to Donald Trump’s victory in the Presidential election last month on anticipation of fewer drug pricing headwinds. This is because Trump has not been as vocal as Hillary Clinton about rising drug prices and excessive cost of treatments. Trump and the Republican Congress are expected to be more lenient on the drug industry’s pricing practices than Clinton would have been.
We note that post elections, biotech stocks have recovered from the sharp selloff witnessed over the past one year. The Zacks-classified Drugs industry gained 1.7% since the elections but declined 16.3% on a year-to-date basis. In November, the Drugs industry rose 2.0%.
Companies like Celgene (9.3%), Merck (1.1%), Pfizer (7.1%), Amgen (4.1%), Bristol-Myers (6.2%), Endo (10.3%) and Regeneron (3.1%) were in the positive territory post elections. However, most of these companies’ shares declined on a year-to-date basis.
Notably, Trump’s intentions to repeal ObamaCare and free up cash currently held overseas for tax reasons are expected to boost the pharma/biotech industry further. With the presidential election over, a group of investors believe that biotechs are geared for an extraordinary comeback.
Also, healthcare mergerand acquisition activity has gathered steam this year. In-licensing activities and collaborations for the development of pipeline candidates have also increased significantly. Several pharma companies are focusing on in-licensing, mid-to-late stage pipeline candidates that look promising instead of developing a product from scratch that take a lot of funds and time.
Merger and acquisitions, especially small bolt-on-acquisitions as well as aggressive in-licensing activities and collaborations are expected to increase, going forward. This is expected to act as a huge catalyst for biotech stocks.
Our Picks
Given such positive trends for biotech stocks, investment in this sector might be prudent at the moment. With the help of the Zacks Stock Screener, we have zeroed in on the following drug stocks that have a favorable Zacks Rank and a VGM score of ‘A’ or ‘B.’ Share price of all these companies rose in the month of November.
Enzo Biochem Inc. (ENZ - Free Report) is an integrated life science and biotechnology company. The company has a Zacks Rank #2 (Buy) and a VGM Score of ‘A.’ You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The Zacks Consensus Estimate for its current year earnings improved 5.6% over the last 60 days. The company’s expected growth rate for the current year is 15.0%. The company’s shares rose 11.8% in November.
Exelixis, Inc. (EXEL - Free Report) is a biopharmaceutical company that engages in the discovery, development, and commercialization of new medicines. The company has a Zacks Rank #2 and a VGM Score of ‘B.’ The Zacks Consensus Estimate for its current year earnings rose 25.4% over the last 60 days. The company’s expected growth rate for the current year is 42.4%. Last month, the company’s shares soared 59.8%.
Regeneron Pharmaceuticals, Inc. (REGN - Free Report) : Tarrytown, NY-based Regeneron is also a Zacks Rank #2 stock and has a VGM Score of ‘A.’ The company surpassed earnings expectations in all three quarters of 2016. The Zacks Consensus Estimate for the current year earnings rose 3.8% over the last 60 days. The company’s expected growth rate for the current year is 5.62%. In November, the company’s shares rose 9.9%.
Regeneron, known for its flagship eye drug – Eylea – has several candidates in its pipeline for a wide range of therapeutic areas, including rheumatoid arthritis (RA), asthma, atopic dermatitis, pain, cancer, and infectious diseases.
Genmab A/S (GNMSF - Free Report) is a biotech company that develops antibody therapeutics for the treatment of cancer. The company has a Zacks Rank #2 and a VGM Score of ‘B.’ The Zacks Consensus Estimate for the current year earnings soared 305.9% over the last 60 days. The company’s expected growth rate for the current year is a 10.70%. In November, the stock rose 3.8%.
VIVUS, Inc. focuses on the development of compounds to treat obesity, sleep apnea, diabetes and sexual health. The company has a Zacks Rank #2 and a VGM Score of ‘A.’ The Zacks Consensus Estimate for its current year earnings scaled around 35% over the last 60 days. The company’s expected growth rate for the current year is 34%. Its shares rose 27.6% in November.
Conclusion
In remains to be seen what’s in store for the biotech industry going forward. We expect some action on drug prices, given the massive focus on the issue this year. Nonetheless, the aforementioned bullish factors call for investment in the space.
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5 Top Performing Biotechnology Stocks of November
November was a great month for pharma/biotech stocks after a rather difficult year when the industry struggled with media and political focus on high drug prices.
The pharma/biotech industry responded favorably to Donald Trump’s victory in the Presidential election last month on anticipation of fewer drug pricing headwinds. This is because Trump has not been as vocal as Hillary Clinton about rising drug prices and excessive cost of treatments. Trump and the Republican Congress are expected to be more lenient on the drug industry’s pricing practices than Clinton would have been.
We note that post elections, biotech stocks have recovered from the sharp selloff witnessed over the past one year. The Zacks-classified Drugs industry gained 1.7% since the elections but declined 16.3% on a year-to-date basis. In November, the Drugs industry rose 2.0%.
Companies like Celgene (9.3%), Merck (1.1%), Pfizer (7.1%), Amgen (4.1%), Bristol-Myers (6.2%), Endo (10.3%) and Regeneron (3.1%) were in the positive territory post elections. However, most of these companies’ shares declined on a year-to-date basis.
Medical Sector Price Index
Medical Sector Price Index
Notably, Trump’s intentions to repeal ObamaCare and free up cash currently held overseas for tax reasons are expected to boost the pharma/biotech industry further. With the presidential election over, a group of investors believe that biotechs are geared for an extraordinary comeback.
Also, healthcare mergerand acquisition activity has gathered steam this year. In-licensing activities and collaborations for the development of pipeline candidates have also increased significantly. Several pharma companies are focusing on in-licensing, mid-to-late stage pipeline candidates that look promising instead of developing a product from scratch that take a lot of funds and time.
Merger and acquisitions, especially small bolt-on-acquisitions as well as aggressive in-licensing activities and collaborations are expected to increase, going forward. This is expected to act as a huge catalyst for biotech stocks.
Our Picks
Given such positive trends for biotech stocks, investment in this sector might be prudent at the moment. With the help of the Zacks Stock Screener, we have zeroed in on the following drug stocks that have a favorable Zacks Rank and a VGM score of ‘A’ or ‘B.’ Share price of all these companies rose in the month of November.
Enzo Biochem Inc. (ENZ - Free Report) is an integrated life science and biotechnology company. The company has a Zacks Rank #2 (Buy) and a VGM Score of ‘A.’ You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The Zacks Consensus Estimate for its current year earnings improved 5.6% over the last 60 days. The company’s expected growth rate for the current year is 15.0%. The company’s shares rose 11.8% in November.
Exelixis, Inc. (EXEL - Free Report) is a biopharmaceutical company that engages in the discovery, development, and commercialization of new medicines. The company has a Zacks Rank #2 and a VGM Score of ‘B.’ The Zacks Consensus Estimate for its current year earnings rose 25.4% over the last 60 days. The company’s expected growth rate for the current year is 42.4%. Last month, the company’s shares soared 59.8%.
Regeneron Pharmaceuticals, Inc. (REGN - Free Report) : Tarrytown, NY-based Regeneron is also a Zacks Rank #2 stock and has a VGM Score of ‘A.’ The company surpassed earnings expectations in all three quarters of 2016. The Zacks Consensus Estimate for the current year earnings rose 3.8% over the last 60 days. The company’s expected growth rate for the current year is 5.62%. In November, the company’s shares rose 9.9%.
Regeneron, known for its flagship eye drug – Eylea – has several candidates in its pipeline for a wide range of therapeutic areas, including rheumatoid arthritis (RA), asthma, atopic dermatitis, pain, cancer, and infectious diseases.
Genmab A/S (GNMSF - Free Report) is a biotech company that develops antibody therapeutics for the treatment of cancer. The company has a Zacks Rank #2 and a VGM Score of ‘B.’ The Zacks Consensus Estimate for the current year earnings soared 305.9% over the last 60 days. The company’s expected growth rate for the current year is a 10.70%. In November, the stock rose 3.8%.
VIVUS, Inc. focuses on the development of compounds to treat obesity, sleep apnea, diabetes and sexual health. The company has a Zacks Rank #2 and a VGM Score of ‘A.’ The Zacks Consensus Estimate for its current year earnings scaled around 35% over the last 60 days. The company’s expected growth rate for the current year is 34%. Its shares rose 27.6% in November.
Conclusion
In remains to be seen what’s in store for the biotech industry going forward. We expect some action on drug prices, given the massive focus on the issue this year. Nonetheless, the aforementioned bullish factors call for investment in the space.
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>>.