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Why These 3 Healthcare Stocks Lost Half Their Value in November
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President-elect Donald Trump is likely to bring some radical changes across the economy in order to boost hiring and corporate earnings, while cutting taxes. Some sweeping policy changes are expected in the healthcare sector as Trump aims to repeal and replace the Affordable Care Act, which is better known as Obamacare, with Health Savings Accounts.
At the same time, he intends to revamp the Medicaid, jeopardizing the future of about 12 million recipients. Speculations are rife that the program will continue to exist, albeit at reduced funding, with recipients being forced to navigate through some hurdles to remain eligible for coverage.
Healthcare insurance firms are also averse to the idea of Trump favoring a key mandate of the erstwhile healthcare law, which prohibits insurers from refusing coverage to patients with preexisting medical problems or from over charging them. Insurers argued that this has eroded their profitability, and has significantly impacted their bottom line over the years.
As the equity market braced itself for the Trump era, some healthcare stocks felt the tremors of his ensuing policy reforms and declined significantly in November. We have narrowed this list by picking a handful of stocks that have eroded in excess of 50% in the past month and are currently trading in excess of $4 per share. Let us have a sneak peek into the list of such underperforming healthcare stocks for the last month.
3 Healthcare Underperformers in November
Adeptus Health Inc. (ADPT - Free Report) : Based in Lewisville, TX, Adeptus is a premier patient-centered healthcare firm that offers high-quality emergency medical care through its network of freestanding emergency rooms and partnerships with premier healthcare providers. This Zacks Rank #5 (Strong Sell) stock has declined approximately 69% in November and has underperformed the Zacks categorized Medical-Hospitals industry. The company missed the third-quarter earnings for a negative average trailing four-quarter earnings surprise of 28.6%.
The company’s earnings estimates for the current quarter have drastically reduced 73.2% from 82 cents to 22 cents per share, in the last 30 days. For the current year, earnings estimates have declined from $2.16 to $1.11 per share or 48.6% in the last 30 days, signifying negative investor sentiments.
Cempra, Inc. : Headquartered in Chapel Hill, NC, Cempra is a clinical-stage pharmaceutical firm focused on developing antibacterials to meet critical medical needs. Cempra currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The stock has declined nearly 65% over the past 30 days. In addition, it has underperformed the Zacks categorized Medical-Services industry with an average negative return of 11% compared with 7.3% for the latter.
Dynavax Technologies Corp. (DVAX - Free Report) : Headquartered in Berkeley, CA, Dynavax is a clinical-stage biopharmaceutical firm that develops multiple products for the prevention of infectious diseases, the treatment of autoimmune and inflammatory diseases, and also treatment of cancer. This Zacks Rank #3 stock declined approximately 51% in November and has underperformed the Zacks categorized Medical-Biomed/Genetics industry with an average negative return of 55.8% compared with 9.7% for the latter.
Furthermore, the company missed the third-quarter earnings for a negative average trailing four-quarter earnings surprise of 13.7%. Earnings estimates of the company have reduced 7.5% and 4.2% for the current quarter and current year, respectively, in the last 30 days, signifying negative investor sentiments.
Moving Forward
Similar to prudent buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be the most opportune time to get rid of them. Investors, therefore, could benefit if they get rid of these healthcare stocks that seem to have lost their sheen at the moment.
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Why These 3 Healthcare Stocks Lost Half Their Value in November
President-elect Donald Trump is likely to bring some radical changes across the economy in order to boost hiring and corporate earnings, while cutting taxes. Some sweeping policy changes are expected in the healthcare sector as Trump aims to repeal and replace the Affordable Care Act, which is better known as Obamacare, with Health Savings Accounts.
At the same time, he intends to revamp the Medicaid, jeopardizing the future of about 12 million recipients. Speculations are rife that the program will continue to exist, albeit at reduced funding, with recipients being forced to navigate through some hurdles to remain eligible for coverage.
Healthcare insurance firms are also averse to the idea of Trump favoring a key mandate of the erstwhile healthcare law, which prohibits insurers from refusing coverage to patients with preexisting medical problems or from over charging them. Insurers argued that this has eroded their profitability, and has significantly impacted their bottom line over the years.
As the equity market braced itself for the Trump era, some healthcare stocks felt the tremors of his ensuing policy reforms and declined significantly in November. We have narrowed this list by picking a handful of stocks that have eroded in excess of 50% in the past month and are currently trading in excess of $4 per share. Let us have a sneak peek into the list of such underperforming healthcare stocks for the last month.
3 Healthcare Underperformers in November
Adeptus Health Inc. (ADPT - Free Report) : Based in Lewisville, TX, Adeptus is a premier patient-centered healthcare firm that offers high-quality emergency medical care through its network of freestanding emergency rooms and partnerships with premier healthcare providers. This Zacks Rank #5 (Strong Sell) stock has declined approximately 69% in November and has underperformed the Zacks categorized Medical-Hospitals industry. The company missed the third-quarter earnings for a negative average trailing four-quarter earnings surprise of 28.6%.
ADEPTUS HEALTH Price
ADEPTUS HEALTH Price | ADEPTUS HEALTH Quote
The company’s earnings estimates for the current quarter have drastically reduced 73.2% from 82 cents to 22 cents per share, in the last 30 days. For the current year, earnings estimates have declined from $2.16 to $1.11 per share or 48.6% in the last 30 days, signifying negative investor sentiments.
Cempra, Inc. : Headquartered in Chapel Hill, NC, Cempra is a clinical-stage pharmaceutical firm focused on developing antibacterials to meet critical medical needs. Cempra currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The stock has declined nearly 65% over the past 30 days. In addition, it has underperformed the Zacks categorized Medical-Services industry with an average negative return of 11% compared with 7.3% for the latter.
CEMPRA INC Price
CEMPRA INC Price | CEMPRA INC Quote
Dynavax Technologies Corp. (DVAX - Free Report) : Headquartered in Berkeley, CA, Dynavax is a clinical-stage biopharmaceutical firm that develops multiple products for the prevention of infectious diseases, the treatment of autoimmune and inflammatory diseases, and also treatment of cancer. This Zacks Rank #3 stock declined approximately 51% in November and has underperformed the Zacks categorized Medical-Biomed/Genetics industry with an average negative return of 55.8% compared with 9.7% for the latter.
DYNAVAX TECH CP Price
DYNAVAX TECH CP Price | DYNAVAX TECH CP Quote
Furthermore, the company missed the third-quarter earnings for a negative average trailing four-quarter earnings surprise of 13.7%. Earnings estimates of the company have reduced 7.5% and 4.2% for the current quarter and current year, respectively, in the last 30 days, signifying negative investor sentiments.
Moving Forward
Similar to prudent buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be the most opportune time to get rid of them. Investors, therefore, could benefit if they get rid of these healthcare stocks that seem to have lost their sheen at the moment.
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>>