Market Overview

Meet The 5 Companies Loving Obamacare

Meet The 5 Companies Loving Obamacare

The Affordable Care Act (ACA) implemented many measures at the beginning of 2014. Amid these changes, stocks responded accordingly.

Here are the best performers among leading U.S. health care stocks since January 2014:

  • Akorn, Inc. (NASDAQ: AKRX)
  • Edwards Lifesciences Corp (NYSE: EW)
  • Intercept Pharmaceuticals Inc (NASDAQ: ICPT)
  • Illumina, Inc. (NASDAQ: ILMN)
  • Puma Biotechnology Inc (NYSE: PBYI)

    The fate of the ACA is something of a question mark if Republicans take control of the U.S. Senate in the midterm elections, as they are expected to do.

    Yet, by and large, the share prices of these five featured stocks have been on the rise in the weeks leading up to the elections.

    Here's a brief look at how these five stocks have fared and what analysts expect from them.

    Related Link: Health Insurance: Obamacare Transforming The Industry


    This drug manufacturer is expected to report strong growth on the top and bottom lines in this week's quarterly report. It has a market capitalization of more than $4 billion and its long-term earnings per share (EPS) growth forecast is about 25 percent.

    Note, though, that short interest is about 14 percent of float.

    All but two of the 11 analysts surveyed by Thomson/First Call recommend buying shares, with three of them rating the stock a Strong Buy. The company's share price is up about 81 percent year-to-date, including a near-23 percent jump in the past month. It is well above the 50-day moving average.

    Edwards Lifesciences

    Heart disease, meanwhile, is the focus of this near-$13 billion market cap company from Irvine, California. Last week's quarterly report and guidance boost sent shares to a new multi-year high. The company's return on equity is more than 45 percent, and its price-to-earnings (P/E) ratio is lower than the industry average.

    The consensus recommendation on Wall Street is to buy Edwards Lifesciences shares, and it has been for at least three months. The stock is almost 84 percent higher than at the beginning of the year, including a more than 22 percent jump in the past month. The S&P 500 is up a little more than 9 percent year-to-date.

    Intercept Pharmaceuticals

    This New York-based bio-pharmaceutical company reported a surprise profit in the previous quarterly report, but another net loss is expected in next week's report. Intercept's market cap is more than $5 billion, but both the return on equity and operating margin are in the red.

    Short interest is about 7 percent of the float.

    All but two of the 14 surveyed analysts recommend buying shares, with five of them rating the stock a Strong Buy. Year to date, shares are up more than 278 percent, though all of the gain came early in the year.

    Shares are down more than 2 percent in the past six months, despite a 10 percent pop in the last week.


    Strong third-quarter results from this San Diego-based biotech included raised guidance. Illumina sports a market cap of more than $27 billion. While its P/E ratio is higher than the industry average, so too is the operating margin. The long-term EPS growth forecast is more than 22 percent.

    Of the 24 analysts surveyed, 16 recommend buying shares. Buying the stock has been the consensus recommendation for at least three months, in fact.

    The share price is around 17 percent higher year-to-date, and the stock hit a new multi-year high on Friday, October 31. Analysts still see 6 percent more upside potential.

    Related Link: How Different Companies Are Tackling The Affordable Care Act

    Puma Biotechnology

    This bio-pharmaceutical company has a market cap of more than $7 billion. Its shares surged on positive Phase 3 data in July and it is a rumored takeover candidate.

    It has, however, reported deeper-than-expected net losses in recent quarters. Net losses are forecast for this year and the next.

    Five analysts were surveyed, and all but one of them recommended buying shares. A move to the analysts' mean price target would be an 18 percent gain.

    The share price is already about 142 percent higher year-to-date, though most of that gain came in July. The stock is up about 5 percent in the past month.

    At the time of this writing, the author had no position in the mentioned equities.


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