With the second-quarter earnings coming fast and furious, and with another big week in front of investors, many of the top Wall Street firms that we cover are getting the chance to sift through the numbers and results. They are also beginning to be able to reexamine not only their theses, but their price targets as well.
New research reports from the biotech, health care and medical device teams at Deutsche Bank raise price targets on three top names to buy and include updates on two others. Investors looking to add new stocks to their portfolios in these areas may want to consider these companies as very solid ideas.
Amgen Inc. (NASDAQ: AMGN) is one of the mega-cap biotechs that many on Wall Street think will handily beat this year’s earnings estimates. Over the past five years, the company has had free cash flow of at least $3 billion a year. Over the past decade, the company has grown its after-tax profit by 14% compounded annually. The company released very positive phase 3 results last week for AMG416, a new treatment for secondary hyperparathyroidism. With the patent on Sensipar expiring in 2017, the company looks to extend the valuable franchise.
Investors are paid a 2% from the biotech giant. Deutsche Bank raised its price target from $144 to $149. The Thomson/First Call consensus target is posted at $132.18. The stock ended trading Friday at $118.30 a share.
Athenahealth Inc. (NASDAQ: ATHN) reported very strong earnings, but some of its cautious commentary caught analysts off guard. The Deutsche Bank team thinks that, despite the earnings beat, investors may focus on the commentary and not the strong fundamentals. The revenue and strong gross margins drove earnings of $0.32 per share, versus their estimate of $0.20 and the consensus of $0.22. Better utilization, faster collections and pricing drove the top line and gross margins.
The Deutsche Bank price target of $182 is way above the consensus number of $159. Athenahealth closed Friday at $124.60, which was down more than 2% on the day.
ExamWorks Group Inc. (NYSE: EXAM) is a leading provider of independent medical exams (IMEs), peer reviews, bill reviews, Medicare compliance and other related services. The company’s current thesis is to transform the IME market through superior IME data security and a national footprint, which the Deutsche Bank analysts feel is playing out almost exactly they envisioned.
Deutsche Bank raised its price target on ExamWorks’ stock from $38 to $40. The consensus target is set at $39.25. Shares closed Friday at $31.55.
Stryker Corp. (NYSE: SYK) has continued to expand its business lines over the past year through acquisitions. Last year, Stryker completed its acquisition of MAKO Surgical to get hold of the latter’s advanced robotic arm technology, known as Robotic Arm Interactive Orthopedic System. The acquisition is helping the company gain a competitive edge in the hip-and-knee replacement market. Stryker good earnings that were in-line with estimates and offered up some mixed guidance for the rest of the year. The company had some positive comments on its 2015 tax status.
Investors are paid a 1.4% dividend. The Deutsche Bank price target for this top medical device stock is $90, and the consensus target is at $88.41. Stryker closed Friday at $82.16 a share.
UnitedHealth Group Inc. (NYSE: UNH) offers the full spectrum of health benefit programs for individuals, employers and Medicare and Medicaid beneficiaries, and it contracts directly with more than 800,000 physicians and care professionals, as well as 6,000 hospitals and other care facilities. The company posted solid second-quarter numbers and delivered improved execution on operating expenses, which if maintained should create a higher earnings-per-share run-rate through 2015.
Investors are paid a 1.8% dividend. The Deutsche Bank price target is $90, and the consensus target is $91.14. The stock closed Friday at $85.52.
Deutsche Bank has a nice mix of stocks that cover a lot of health care sector ground. Going forward, with an aging population, these names should continue to do well in a long-term growth portfolio.
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