Recent weeks have not been friendly to the pharmaceutical industry, with some stocks in the sector such as Valeant Pharmaceuticals (NYSE:VRX) and Horizon Pharma (NASDAQ:HZNP) withering amid criticism over the industry’s drug-pricing practices and fears of greater regulation.
But two biotechs with top fundamentals — Gilead Sciences (NASDAQ:GILD) and Regeneron Pharmaceuticals (NASDAQ:REGN), the focus of the Screen of the Day — have maintained strong ratings and held up in the stock market despite the furor. Companies with top fundamentals, by IBD’s definition, have three-year EPS and sales growth rates of at least 25%.
Gilead Sciences, which has faced a raft of criticism over the price of its hepatitis C wonder drug, Sovaldi, has a three-year EPS growth rate of 106% and a three-year sales growth rate of 60%. The company handily beat Q3 estimates last month, raising full-year sales guidance that was just shy of expectations.
Gilead, like other pharma stocks, fell on Sept. 21, when Democratic presidential hopeful Hillary Clinton said she would introduce a plan to crack down on what she called “price gouging” in the industry. Clinton’s announcement came after Turing Pharmaceuticals was harshly criticized for its decision to buy a six-decade-old drug and quickly raise its price by more than 5,000%.
Gilead breached its 200-day line that day and sank further for a month before clearing its 50-day and 200-day line. The stock has found support at its 200-day moving average since.
Shares closed down 2.8% in the stock market today.
Regeneron Pharmaceuticals (NASDAQ:REGN), which makes the cholesterol fighter Praluent with Sanofi (NYSE:SNY), has a three-year EPS growth rate of 46% and a three-year sales growth rate of 45%. But sales of Praluent, seen as a possible blockbuster, were less than half of what analysts expected in Q3. EPS and overall sales beat forecasts.
Regeneron fell the day of Clinton’s announcement, finished higher the next two days, then descended below its 200-day line on Sept. 28. But the stock has since climbed above its 50-day line.
Regeneron stock dipped 2.5% Thursday as the stock formed a handle on a three-month consolidation.
While Regeneron and Gilead have turned in stronger showings recently, stocks such as Valeant Pharmaceuticals, Mallinckrodt (NYSE:MNK) and Horizon Pharma have been hit hard. Short-seller Citron Research last month accused Valeant of shady sales practices and criticized the drugmaker for price-hikes in its acquired drugs. And Citron this month attacked Mallinckrodt, saying sales of its drug Acthar had lagged and questioned the gel’s effectiveness.
And Express Scripts (NASDAQ:ESRX) on Wednesday sued Horizon Pharma, saying it owed millions in unpaid drug rebates, and cut from its network a specialty pharmacy that Horizon was using. Valeant also has been hammered over its specialty pharmacy ties.
Mallinckrodt, Valeant and Horizon are all trading their 50-day and 200-day lines.
Valeant shares ended down 6.5% Thursday, Horizon lost 2%, while Mallinckrodt fell 6.5%. Express Scripts slid 0.5%.
Read More At Investor’s Business Daily: http://news.investors.com/technology/111215-780445-gilead-regeneron-high-growth-seen-for-pharmas-gilead-regeneron.htm#ixzz3rOwR8Snf
BY BILL PETERS, INVESTOR’S BUSINESS DAILY