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After a forgettable year for biotech and healthcare stocks, 2017 has dawned with new hopes. Although the Democratic threat on a clamp down on price gouging hit the space for much of 2016 amid the presidential election campaign, the election of Republican Donald Trump initially generated some optimism. However, Trump has since sent out a veiled threat of being uncomfortable with higher drug prices.
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Against this backdrop, Cantor Fitzgerald initiated coverage of the following biotech and healthcare stocks at Overweight, making these its top picks in the space for 2017:
- athenahealth, Inc (NASDAQ: ATHN): price target of $135 (18 percent upside from current levels).
- Cerner Corporation (NASDAQ: CERN): price target of $66 (34 percent upside from current levels).
- eHealth, Inc. (NASDAQ: EHTH): price target of $15 (48 percent upside from current levels).
- Evolent Health Inc (NYSE: EVH): price target of $26 (74 percent upside from current levels).
- NantHealth Inc (NASDAQ: NH): price target of $17 (73 percent upside from current levels).
- Omnicell, Inc. (NASDAQ: OMCL): price target of $40 (21 percent upside from current levels).
- Teladoc Inc (NYSE: TDOC): price target of $25 (over 50 percent upside from current levels).
Athenahealth's Traditional Market Disrupting Cloud-based Offering
Cantor analyst Steven Harper noted that athenahealth has demonstrated its ability to disrupt the traditional market for physician practice management and clinical information systems with its cloud-based offering. The analyst also highlighted the company's 2017 guidance for 18.5 percent top line growth, with indications that it could hit operating income growth of 34 percent, as it realizes operating leverage. The firm feels the shares are attractive.
Cerner: Bellwether Among Publicly Traded Healthcare IT Companies
Cantor said Cerner remains the bellwether among publicly traded healthcare IT companies. Notwithstanding the recent disappointing performance, the firm said it does not share investor concerns about the company's future growth prospects. Harper feels the shares of Cerner are considerably undervalued at this juncture. The $66 price target represents 36 percent upside from current levels.
EHealth: Well Suited To Weather The Storm
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Cantor feels eHealth may benefit if the incoming Trump administration dismantles the Affordable Healthcare Act, beginning in 2018. The ACA negatively impacted eHealth, as many individuals now buy insurance on an exchange, bringing down the company's individual and family plan membership by 25 percent year-over-year. Analysts Harper said it remains to be seen if the company's new strategy outlined in its third quarter results will pay dividends. Accordingly, the firm believes the company is well suited to weather the storm.
Evolent Health: Well Positioned To Grow Rapidly
Harper believes Evolent Health, a technology-enabled cloud-based service provider, is well positioned to grow rapidly from the ongoing shift to value-based reimbursement, due to the large addressable market. The company's population health management tools allow healthcare organizations to transition to value-based reimbursement, with captive health insurance plans of large integrated delivery networks being its primary customers. The analyst believes market forces will continue to drive the shift to value-based reimbursement in many large population markets.
NantHealth's Unique Cancer Screening Test A Gamechanger
Cantor believes NantHealth's unique cancer screening test, called GPS Cancer, is poised to change cancer care. The slower than expected ramp of the strategy does not diminish the firm's enthusiasm.
Omnicell To Continue To Gain Share
Cantor is of the view that Omnicell will continue to gain market share from industry leader Pyris, a subsidiary of Becton Dickinson and Co (NYSE: BDX), given its product differentiation and lower cost of ownership. The firm noted that over the years, the company has broadened its product set to improve hospital pharmacy efficiencies beyond dispensing. Cantor views the acquisition of Aesynt, a provider of robotic technology hospitals and a growing IV automation solution, to be transformative.
Teladoc: Poised To See Strong Industry Growth
Harper believes Teladoc, a provider if telehealth services to health plans and employers, is poised to see strong industry growth over the next several years. Explaining the prospects, the analyst highlighted the CDC data that showed 1.25 billion ambulatory visits occur each year. The company believes about at least one-third of these visits could be treated with telehealth, the analyst noted.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.