The health care sector is likely reacting to the uncertainty created by the effect of cuts to the federal budget now being implemented by one of three government branches: the executive aka the White House. The potential loss of Medicaid, for example, would have a huge impact on pharmaceuticals and related industries.
And that’s just one example. With the Senate voting to make the anti vaccine proponent Robert F. Kennedy, Jr. as head of the Department of Health and Human Services in President Trump’s cabinet, questions about his guidance in that area trouble analysts who cover stocks affected.
Investors in these four healthcare stocks haven’t been waiting to see what develops: they’ve been selling. So much unloading has taken place recently that a number of well-known names already have dropped to new 52-week lows. It’s a dramatic difference from the recent popularity of tech and social media stocks.
Other factors enter into the new lows, of course, but with that overriding issue, it’s a problem for the sector as a whole.
4 Health Care Stocks With New Lows
Hologic (NASD: HOLX)
The red circled spot on these price charts indicates the spot where the stock’s 50-day moving average crossed below its 200-day moving average and a downtrend ensued.
The medical instruments and supply company specializes in women’s health issues and features a “women’s health index” on the company website. Market cap is $14.19 billion. The price-earnings ratio is 20. The stock trades at 2.99 book value and the debt-t0-equity ratio is a relatively low (for the sector) 53. The healthcare research investment firm Leerink Partners on February 6th downgraded their opinion of Hologic from “outperform” to “market perform” with a price target of $75.
Merck (NYSE: MRK)
The drug manufacturer has a market cap of $209.99 billion. Merck is one of the 30 Dow Jones Industrials and it’s a component of the S&P 500. The price-earnings ratio is 12.33. This year’s earnings are up by 17% and up over the past five years by 12%. The company pays a dividend of 3.92%. On February 10th, TD Cowen downgraded the stock from “buy” to “hold” with a price target of $100.
Moderna (NASD: MRNA)
This biotech company has a market cap of $12.70 billion. There is no price-earnings ratio as this year’s “earnings” are down by 4.50% and down over the past five years by 42.94%. Moderna trades at just 1.06 times book. The short float on the stock is a relatively high 11.83% which demonstrates definite interest by those who sell short. The company does not pay a dividend. Goldman on January 29th downgraded Moderna from “buy” to “neutral” with a price target of $51.
Novo Nordisk (NYSE: NVO)
The drug manufacturer, based in Denmark, has a market cap of $262 billion. Some analysts believe the stock may be suffering from negative reaction to a Superbowl ad for their product “Him and Hers.” The price-earnings ratio is 23 and the price-to-free cash flow is 24. The next dividend, with an ex-date of March 31st, will pay a 2.45% dividend. The short float is a low .40, indicating lack of interest among Wall Street’s short selling crowd.
More analysis and commentary at johnnavin.substack.com.
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