The healthcare sector has held up strong amid the global pandemic, yet not all names have escaped COVID-19's grasp. For several companies inhabiting the space, historically low levels of utilization for both traditional procedures and services as a result of COVID-19 and the expected mass consumption after restrictions are loosened have presented significant headwinds. It doesn’t help that unemployment also poses risks. Against this backdrop, investment firm Goldman Sachs took a deep dive into the space, hoping to get a better sense of where healthcare stocks stand during these unprecedented times. Given the uncertainty still hanging in the balance, the firm points out that investments in the sector aren’t without risk. That being said, it argues that some names are poised to deliver a strong performance in the long run. With this in mind, we wanted to take a closer look at two healthcare stocks that just received Goldman Sachs’ stamp of approval, with the firm projecting upside potential of more than 30% for each. Using TipRanks’ database, we found out that the rest of the Street is also on board as both have earned a “Strong Buy” consensus rating. Adaptive Biotechnologies Corporation (ADPT) Taking advantage of the inherent biology of the immune system, Adaptive Biotechnologies wants to transform the way diseases are diagnosed and treated. Based on the strength of the sequencing and diagnostic company’s portfolio, Goldman Sachs believes that now is the time to pull the trigger. Representing the firm, five-star analyst Salveen Richter tells clients ADPT offers commercial technologies designed for specific use cases. Its immunoSEQ platform is used in academic and biopharma research while clonoSEQ was developed for a clinical setting, with the latter able to detect minimal residual disease (MRD). This will be expanded to include blood-based (liquid biopsy) testing (versus bone marrow), and will increasingly be used as a primary endpoint during clinical trials. The good news doesn’t end there. Richter argues that its clinical diagnostic product pipeline, which includes immunoSEQ Dx from its collaboration with Microsoft, as well as its drug discovery pipeline that features the Amgen-partnered COVID-19 program, are capable of driving significant upside. On top of this, ADPT made its foray into the world of drug development, collaborating with Genentech on the development of cellular therapies in oncology. Going beyond this agreement, Richter thinks the company could potentially pursue other opportunities in cell therapy separate from the partnership, including other disease states like autoimmune diseases and cancer vaccines. “We view the collaborations with industry-defining leaders such as Genentech, MSFT and AMGN as validating to ADPT’s approach to advance immune-driven medicine, and note the Genentech agreement provides ADPT with significant milestone (potentially up to $1.8 billion in aggregate) and royalty payments on future sales of drugs that are created by utilizing ADPT’s platform,” Richter explained. To sum up her take, Richter noted, “Overall, we have a positive view on the fundamental trajectory of the business and innovative platform technology, and see immunoSEQ Dx and drug discovery as significant value drivers in the future, supported by steady revenue growth from ADPT’s base businesses for clonoSEQ and immunoSEQ.” Based on all of the above, it’s no wonder Richter kicked off her coverage of ADPT by publishing a Buy recommendation. With a $60 price target, shares could climb 55% higher in the next twelve months. (To watch Richter’s track record, click here) All in all, other analysts echo Richter’s sentiment. 3 Buys and no Holds or Sells add up to a Strong Buy consensus rating. Given the $52 average price target, the upside potential comes in at 34%. (See Adaptive Biotechnologies stock analysis on TipRanks) Humana Inc. (HUM) While acknowledging that health insurance company Humana has faced newer entrants in the Medicare Advantage (MA) market, its mix of business and sheer size make it a stand-out, in Goldman Sachs’ opinion. Weighing in on the stock for the firm, five-star analyst Robert Jones sees HUM’s scale, brand reputation and provider infrastructure as positioning it to “continue to gain share in the fastest growing vertical of Managed Care.” He added, “Importantly, continued growth in this end-market also has a more pronounced impact to HUM’s bottom line versus other managed care organizations (MCOs) given HUM’s more concentrated exposure to MA.” In the past, the company’s exposure within the MA space has been “an attractive value proposition given the secular growth drivers that are present”, but now, the segment looks even stronger, according to Jones. For the most part, MA has managed to escape the impacts of COVID-19, which could help drive multiple expansion. Another key component of Jones’ bullish thesis is its primary care strategy. As part of this approach, HUM has opened payor-agnostic, senior-focused primary care centers, with it building over 260 of these owned, joint venture or alliance primary care centers. The company also announced another 35 are set to open in 2020. Expounding on the benefits of its strategy, Jones commented, “Looking forward, we think HUM’s primary care strategy could be a meaningful growth lever for the company. In our view, the opportunity from these centers is threefold, in that it could help HUM (1) recruit and retain MA members, (2) increase the profitability of the members that are managed under these value-based arrangements, and (3) recognize long-term EBITDA growth from the providers themselves.” Of these, the analyst believes the possibility of stronger growth and retention, as well as improved member profitability are “the most meaningful.” Everything HUM has going for it prompted Jones to take a bullish stance. In addition to initiating coverage with a Buy rating, he set a $510 price target. This target suggests shares could surge 31% in the next year. (To watch Jones’ track record, click here) Turning now to the rest of the Street, most other analysts are on the same page. With 12 Buys and 2 Holds assigned in the last three months, the word on the Street is that HUM is a Strong Buy. Additionally, the $435.50 average price target brings the upside potential to 12%. (See Humana stock analysis on TipRanks)
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The U.S. District Court for the District of New Jersey has ruled in favor of Teva Pharmaceutical Industries Ltd. (TEVA) in a patent infringement lawsuit regarding a generic version of Narcan nasal spray for the treatment of opioid overdose.Claims from four patents related to Narcan were found to be invalid, according to the ruling by a New Jersey federal judge. The lawsuit, filed by Opiant Pharmaceuticals Inc. (OPNT) and Emergent BioSolutions Inc. (EBS) alleged that Teva’s generic version of Narcan nasal spray infringes the drug’s patent.In reaction to the decision, Opiant said that its commercial partner Emergent BioSolutions, intends to appeal the decision at the Court of Appeals for the Federal Circuit.Narcan, a life-saving medication that can stop or reverse the effects of opioid overdose, was developed by Opiant and licensed to Adapt Pharma, which was has been bought by Emergent BioSolutions. Since 1999, more than 400,000 Americans have died from opioid overdoses, according to statistics from the Centers for Disease Control and Prevention.“While we are disappointed by the decision today, we are mindful of the important role Narcan nasal spray plays across the U.S. in helping our communities save lives from opioid overdose,” said Opiant President and CEO Roger Crystal. “With our pipeline and strong financial position, we remain committed to develop best-in-class medicines for addiction and overdose.”Back in April 2019, Teva was given FDA approval for the first generic naloxone hydrochloride nasal spray, commonly known as Narcan.Teva shares rose 2.1% to $12.84 in after-market trading on Friday. The stock’s value has almost doubled since reaching a low in March and is now trading 34% higher than at the start of the year.This month, SunTrust Robinson analyst Gregg Gilbert raised Teva to Buy from Hold with a price target of $16, up from $11.Gilbert asserted that he had previously kept a neutral view on the stock amid investor skepticism regarding the generic drugmaker’s long-term targets and its ability to manage its opioid and collusion liabilities.“The evidence regarding Teva's ability to achieve its leverage and margin targets is growing, with some potential for clarification about the size and timing of liabilities becoming clearer in the coming months,” Gilbert wrote in a note to investors.Overall though Wall Street analysts are mainly sidelined on the stock. The Hold consensus shows 5 Hold ratings and 3 Sell ratings versus 2 Buy ratings. In view of the recent rally, the $11.60 average price target implies 10% downside potential in the shares in the coming year. (See Teva stock analysis on TipRanks).Related News: Novavax Spikes 31% on $384 Million Cash Injection for Vaccine Production Moderna’s (MRNA) Stock Will Surge 80% From Current Levels, Says Analyst Think Novavax Has Surged Enough for Now? Think Again, Says 5-Star Analyst More recent articles from Smarter Analyst: * AbbVie Announces Partnership To Develop Novel Covid-19 Antibody Therapy * PG&E; Is Said To Ready $11 Billion Debt Financing Plan * Novavax Surging On $60M Funding For Covid-19 Vaccine Candidate * Facebook To Start Labeling State-Controlled Media Ahead of US Elections