Healthcare Business

5 Top Jefferies Health Care Picks Have Big-Time Potential


This top life sciences company is a favorite across Wall Street. Danaher Corp. (NYSE: DHR) is now one of the largest and most diversified life sciences companies. Its products include analytical instruments and consumables for life sciences research, diagnostics, dental instruments and consumables, as well as equipment and services used in water quality testing and product identification.

The company is known as having leading brands across many verticals, with a strong management team and a record of superior execution. The Jefferies team sees core growth continuing to accelerate via acquisitions, noting that the company is focused on growth markets with recurring revenue streams and high gross margins.

Shareholders are paid a small 0.63% dividend. The $115 Jefferies price target is well above consensus the consensus price objective of $108.41. The shares were changing hands near $102.00.

Gilead Sciences

This company is trading a very reasonable 10.6 times estimated 2018 earnings. Gilead Sciences Inc. (NASDAQ: GILD) is a biopharmaceutical company that discovers, develops and commercializes therapies for the treatment of HIV/AIDS, liver disease, cancer and inflammation. The recent acquisition of KITE allows for entry into the CAR-T space, indicating a renewed focus in oncology.

The company’s products include Stribild, Complera/Eviplera, Atripla, Truvada, Viread, Emtriva, Tybost and Vitekta for the treatment of human immunodeficiency virus (HIV) infection in adults; and Harvoni, Sovaldi, Viread and Hepsera products for the treatment of liver disease.

Gilead also has a large pile of cash overseas, which the analysts feel could come back stateside with a low repatriation rate. They also see the stock as a cheap biotech play with a 10% to 15% free-cash-flow yield, balance sheet optionality and Wall Street expectations that remain low.

Shareholders are paid a very solid 2.85% dividend. The Jefferies analysts have set their price objective at $95. The consensus price target is $88.27, and the stock was last seen at $80.45 a share.

Horizon Pharma

The may be a great play for more speculative accounts. Horizon Pharma PLC (NASDAQ: HZNP) is a specialty pharmaceutical company based in Ireland, and through its subsidiaries, develops and commercializes medicines for the treatment of arthritis, pain and inflammatory diseases.

The company’s best-known products include Actimmune for reducing the frequency and severity of serious infections associated with chronic granulomatous disease, and Duexis, a proprietary tablet formulation for the relief of signs and symptoms of rheumatoid arthritis and osteoarthritis.

Horizon has successfully reprioritized its investment focus to specialty/orphan drugs, which now comprises 65% of its business. In 2018, many see Krystexxa (chronic refractory gout) as the primary growth driver, with opportunity beyond rheumatology into nephrology, which doubles its target audience. The Jefferies team sees a company that is rapidly transitioning from a lower margin short duration primary care business to a higher margin long duration orphan drug company.

The Jefferies price objective is $21. The posted consensus target price is $19.58, and the stock recently traded at $15.65 per share.

These five top companies with different health care businesses all can provide nice exposure to the sector in growth portfolios. All make sense now as none trade at absurd multiples or are highly speculative.

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