Alexion, Novocure, ACADIA: Out Of Favor Health Care Stocks Poised For Gains
The performance of the healthcare sector has been mixed this year. While dental and surgery-related stocks have declined – as Covid-19 impacts sectors that require a close person to person contact, companies working on Covid-19 vaccines have outperformed significantly. On the other hand, the stocks of several high-growth companies that sell therapeutics that are relatively insulated from the pandemic have remained listless. In this analysis, we’ve picked a few healthcare names including Novocure (NASDAQ NDAQ: NVCR), ACADIA (NASDAQ: ACAD), and Alexion (NASDAQ: ALXN) that have witnessed strong growth and improving fundamentals over the last few years but have still underperformed this year. Overall, we believe these stocks could offer some growth and stability in the current environment, without being overpriced. See our analysis Out Of Favor Health Care Stocks That Are Still Poised For Gains for more details on the returns and performance of these stocks. Parts of the analysis are summarized below.
Alexion ($23 billion, -3% YTD) is a pharma company best known for Soliris, a drug used to treat atypical hemolytic uremic syndrome and paroxysmal nocturnal hemoglobinuria – two rare disorders. The company has seen demand for Soliris grow, with revenues almost doubling from $2.6 billion in 2015 to $5 billion in 2019. Alexion’s pipeline also looks strong, with multiple drugs in phase 3 clinical trials including Ultomiris, which is its next-generation drug for PNH.
ACADIA Pharmaceuticals ACAD ($7 billion, +2% YTD) a biopharmaceutical company known for its flagship drug Nuplazid, which helps to treat the hallucinations associated with Parkinson’s disease psychosis. However, the stock gave up much of its year-to-date gains after Nuplazid recently failed in a trial for depression treatment. The company could still see upside as Nuplazid continues to see strong demand from the PDP treatment, with total revenue rising steadily from about $17 million in 2016 to about $340 million last year.
Novocure ($7 billion, -20% YTD) is an oncology company that offers a novel therapy called Tumor Treating Fields, that uses electric fields to disrupt solid tumor cancer cell division. The company’s revenues have grown from around $33 million in 2015 to $350 million in 2019. While the TTF device is currently used for some types of brain cancer, late-stage trials are underway for its use in other conditions including lung carcinoma, ovarian cancer, and pancreatic cancer and this could drive future growth.
Alkermes ($3 billion, -4% YTD) is a biopharmaceutical company that focuses on drugs for diseases in the central nervous system including schizophrenia, depression, and multiple sclerosis. The company has been seeing steady demand growth, with revenue growing from around $0.6 billion in 2015 to about $1.2 billion in 2019.
Looking for stocks that could offer outsized outperformance? Here is a shortlist of 4 companies that beat the S&P 500, every single year, year after year, for the last 10 years.
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