Many investors want to try to find the stocks that are going to offer the traditional “beat and raise estimates” before they release quarterly earnings reports. Actually, it has always been a strong trading trend to watch for companies that beat earnings and raise estimates, and then buy the stocks. A new research note from Cowen focuses on companies that have released earnings and offer investors reasons to own their stocks going forward.
The Cowen team has five top health care and biotech stocks to buy that have reported already. The stocks are all rated Outperform at the firm.
Amgen Inc. (NASDAQ: AMGN) reported outstanding earnings recently. Despite the strong move, the Cowen team suggests investors buy this classic biotech blue chip for more potential upside. They point to the company’s tremendous pipeline and outstanding forward earnings and revenue capabilities. Amgen continues to trim its gigantic workforce, as it bows to activist hedge fund shareholders.
Amgen investors are paid a 1.7% dividend. The Cowen price target for the stock is $168. The Thomson/First Call consensus target is lower at $144.90, but investors can bet that consensus number goes higher, as Amgen closed Wednesday at $158.88.
Gilead Sciences Inc. (NASDAQ: GILD) earnings disappointed, and the Cowen analysts feel this gives investors an entry point to the stock on a one-off issue that is probably smoothed out after this past quarter. The third-quarter numbers faced very high expectations. The Cowen analysts and others on Wall Street are confident that launch of Gilead’s new hepatitis C (HCV) drug Harvoni will significantly restrengthen the company’s HCV franchise trends. The Cowen analysts are so confident, they are making no changes to their fourth-quarter and 2015 HCV franchise estimates.
Cowen places a $125 price target on the stock, while the consensus target is $118.08. Shares closed down over 3% Wednesday at $110.72.
Dyax Corp. (NASDAQ: DYAX) has made a slow steady climb this year, and the stock could be ready for lift-off. The company beat on revenues when it reported Tuesday, and it upped the estimates for 2015 as well. Dyax is a fully integrated biopharmaceutical company focused on the discovery, development and commercialization of novel biotherapeutics for unmet medical needs. It currently markets Kalbitor (ecallantide) for the treatment of acute attacks of hereditary angioedema (HAE) in patients 12 years of age and older. Dyax is also developing DX-2930 for the prophylactic treatment of HAE.
Cowen has a $12.65 price target for the stock, and the consensus figure is $12.36. Shares ended trading at $11.74.
McKesson Corp. (NYSE: MCK) delivers pharmaceuticals, medical supplies and health care information technologies to the health care industry, primarily in the United States. In many analysts view, McKesson’s operations and underlying fundamentals are as strong as any in the business, such that shares warrant at least a similar multiple to the group average. The company reported outstanding earnings this week, and once again the core distribution unit showed strong gains, up a solid 37% year-over-year.
McKesson investors paid a small 0.5% dividend. The Cowen price objective is $227, and the consensus target is $219.09. Shares close Wednesday at $198.45.
Stryker Corp. (NYSE: SYK) posted solid third-quarter earnings when it reported last week. The company 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, and the Cowen team feels that the acquisition will help drive the company’s share gains.
Stryker investors are paid a 1.4% dividend. Cowen raised its price target from $91 to $96, while the consensus target is $89.81. The stock closed at $86.68 a share.
There is always something to be said for buying stock after the news is out, because surprises are far less likely to crop up. These top biotech and health care stocks are very suitable for more aggressive growth portfolios.