The healthcare sector has been the top performing group in one year performance, with a 16.5% gain during that period.
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Based on this observation I screened for companies in the healthcare sector where at least one insider made a buy transaction during the month of November. Here is a look at five stocks that I found.
1. Genomic Health (GHDX) is a global healthcare company that provides actionable genomic information to personalize cancer treatment decisions. The company's lead product, the Oncotype DX breast cancer test, has been shown to predict the likelihood of chemotherapy benefit as well as recurrence in invasive breast cancer and has been shown to predict the likelihood of recurrence in ductal carcinoma in situ [DCIS]. In addition to this widely adopted test, Genomic Health provides the Oncotype DX colon cancer test, the first multi-gene expression test developed for the assessment of risk of recurrence in patients with stage II and stage III disease. As of September 30, 2012, more than 10,000 physicians in over 65 countries had ordered more than 320,000 Oncotype DX tests. Genomic Health has a robust pipeline focused on developing tests to optimize the treatment of prostate and renal cell cancers, as well as additional treatment decisions in breast and colon cancers. The company is based in Redwood City, California with European headquarters in Geneva, Switzerland.
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Insider buys
Felix Baker purchased 103,167 shares on November 14 and 823,772 shares on November 9-13 by his funds. Felix Baker has served as a director of Genomic Health since 2012. Felix Baker is a Managing Partner of Baker Brothers Investments, which he and his brother, company director Julian Baker, founded in 2000.
Financials
The company reported the third-quarter financial results on November 7 with the following highlights:
| Revenue | $58.6 million |
| Net income | $3.7 million |
| Cash | $127.0 million |
Outlook
Kimberly Popovits, Chairman, Chief Executive Officer, President and Member of Non-Management Stock Option Committee, commented on November 7 earnings conference call:
"With the planned launch of our prostate cancer test in the first half of 2013, we move a step closer to capturing the $3.5 billion global opportunity across breast, colon and prostate cancer and, importantly, further diversify our future growth drivers. While preparing to launch our third product franchise, we will continue to invest in our proven global commercial capability that is currently generating both international momentum and increasing penetration in new markets for our breast and colon cancer tests."
Competition
Genomic Health's main competitor is Hologic (HOLX). Here is a table comparing these two companies.
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My analysis
The stock has a $22 price target from the Point and Figure chart. There have been 17 insider buy transactions and 46 insider sell transactions this year. There are six analyst buy ratings, seven neutral ratings and two sell ratings with a average target price of $30.80. The stock is trading at a P/E ratio of 97.50 and a forward P/E ratio of 85.31. I have a neutral bias for the stock currently.
2. Halozyme Therapeutics (HALO) is a biopharmaceutical company dedicated to developing and commercializing innovative products that advance patient care. With a diversified portfolio of enzymes that target the extracellular matrix, the company's research focuses primarily on a family of human enzymes, known as hyaluronidases, that increase the absorption and dispersion of biologics, drugs and fluids. Halozyme's pipeline addresses therapeutic areas, such as diabetes, oncology and dermatology that have significant unmet medical need. The company markets Hylenex recombinant (hyaluronidase human injection) and has partnerships with Roche, Baxter, ViroPharma and Intrexon. Halozyme is headquartered in San Diego, CA.
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Insider buys
- Kathryn Falberg purchased 50,000 shares on November 13 and currently holds 160,000 shares of the company. Kathryn Falberg serves as a director of the company.
- James Shaffer purchased 20,000 shares on November 14 and currently holds 26,300 shares of the company. James Shaffer is Vice President, Chief Commercial Officer of the company.
- Kenneth Kelley purchased 20,000 shares on August 27 and 20,000 shares on May 14. Kenneth Kelley currently holds 150,000 shares of the company. Kenneth Kelley serves as Chairman of the Board of Directors.
- Gregory Frost purchased 2,000 shares on August 13 and currently holds 3,555,331 shares of the company. Gregory Frost is President, Chief Executive Officer and member of the Board of Directors. Dr. Gregory Frost co-founded Halozyme in 1999 and has spent more than fifteen years conducting research on the extracellular matrix.
- Randal Kirk purchased 194,189 shares on June 1-5, 1,071,498 shares on May 15-17 and 1,360,000 shares on February 10. Randal Kirk is a 17.7% owner of the company and also serves as a director of Halozyme. Randal Kirk's net worth was $2.4 billion as of September 2012.
Financials
The company reported the third-quarter financial results on November 8 with the following highlights:
| Revenue | $5.3 million |
| Net loss | $20.0 million |
| Cash | $87.6 million |
The company's 2012 cash burn guidance is $60-$65 million.
Upcoming milestones
- Roche (RHHBY.OB) to present data from the Phase III MabThera SC trial and file the marketing authorization application [MAA] with the European Medicines Agency [EMA] in 2012
- Present HTI-501 clinical proof-of-concept data
- Decision regarding Herceptin SC MAA from the EMA
- Complete Cinryze SC+rHuPH20 Phase II study
- Initiate Phase 4 studies to support use of Hylenex with insulin pumps
- Present data from the run-in cohorts of the PEGPH20 Phase 2 program in oncology and continue with the randomized portion of the trial
My analysis
The stock is currently trading at multi-month lows. There have been eight insider buy transactions and there have not been any insider sell transactions this year. There are four analyst buy ratings, one neutral rating and one sell rating with a average target price of $10.43. I have a bullish bias for the stock currently.
3. Boston Scientific (BSX) is a worldwide developer, manufacturer and marketer of medical devices that are used in a broad range of interventional medical specialties.
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Insider buys
- N.J. Nicholas, Jr. purchased 25,000 shares on November 9 and currently controls 498,475 shares of the company. N.J. Nicholas, Jr. serves as a director of the company.
- Ernest Mario purchased 32,000 shares on August 6 and currently holds 500,604 shares of the company. Dr. Mario serves as a director of the company.
- Michael Mahoney purchased 22,000 shares on July 31. Michael Mahoney is President for Boston Scientific Corporation and a member of its Executive Committee. In this role, he is responsible for the company's Cardiac Rhythm Management [CRM] and Endoscopy (GI and Pulmonary) businesses, as well as certain corporate functions.
- Hank Kucheman purchased 10,000 shares on July 31 and currently holds 180,828 shares of the company. Hank Kucheman is Chief Executive Officer for Boston Scientific Corporation and serves on its Board of Directors.
Financials
The company reported the third-quarter financial results on October 18 with the following highlights:
| Revenue | $1.7 billion |
| Net loss | $725 million |
| Cash | $352 million |
| Debt | $4.3 billion |
Outlook
The company estimates sales for the fourth quarter of 2012 in a range of $1.740 billion to $1.815 billion. The company estimates earnings on a GAAP basis in a range of $0.06 to $0.09 per share. Adjusted earnings, excluding acquisition- and restructuring-related charges and amortization expense are estimated in a range of $0.15 to $0.18 per share.
The company estimates sales for the full year 2012 in a range of $7.168 billion to $7.243 billion. The company estimates losses on a GAAP basis in a range of $2.89 to $2.86 per share. Adjusted earnings, excluding goodwill and other intangible asset impairment charges, acquisition- and divestiture-related net credits, restructuring- and litigation-related charges, discrete tax items, and amortization expense are estimated in a range of $0.63 to $0.66 per share.
Competition
The company's main competitors include Abbott Laboratories (ABT), Johnson & Johnson (JNJ) and Medtronic (MDT). Here is a table comparing these companies.
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Boston Scientific is currently trading below the industry average P/S ratio.
My analysis
The stock is trading at its 52 -week lows. There have been four insider buy transactions and there have not been any insider sell transactions since March 2012. There are five analyst buy ratings, 15 neutral ratings and two sell ratings with a average target price of $6.47. The stock is trading at a forward P/E ratio of 12.07. The company has a book value of $4.97 per share which could act like a support for the stock.
4. AngioDynamics (ANGO) is a leading provider of innovative, minimally invasive medical devices used by professional healthcare providers for vascular access, surgery, peripheral vascular disease and oncology. AngioDynamics' diverse product lines include market-leading ablation systems, fluid management systems, vascular access products, angiographic products and accessories, angioplasty products, drainage products, thrombolytic products and venous products.
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Insider buys
- Jeffrey Gold purchased 1,000 shares on November 5 and currently holds 25,233 shares of the company. Jeffrey Gold has served as a director since 1997.
- Joseph Devivo purchased 2,000 shares on July 17, 5,000 shares on April 9 and 3,000 shares on February 13. Joseph Devivo currently holds 38,000 shares of the company. President and Chief Executive Officer Joseph DeVivo joined AngioDynamics in September 2011. Previously, Mr. DeVivo was CEO and President of RITA Medical Systems where he transitioned it from an ablation company to the leader in medical device oncology. AngioDynamics acquired RITA in 2006.
- Vincent Bucci purchased 2,000 shares on April 12, 2,000 shares on April 9, 2,000 shares on February 21 and 3,000 shares on February 13-15. Vincent Bucci currently holds 33,846 shares of the company. Vincent Bucci joined the company's Board of Directors in January 2007 and was named Chairman in July 2007. From 1999 to 2007, Mr. Bucci served as Chairman of the Board of Directors of RITA Medical Systems.
- Kevin Gould purchased 2,700 shares on April 11. Kevin Gould, former Chief Operating Officer of Tyco Healthcare, joined AngioDynamics' Board of Directors in October 2010. Mr. Gould has more than 30 years of healthcare industry experience.
- Matthew Kapusta purchased 1,000 shares on April 10 and currently holds 16,000 shares of the company. Senior Vice President of Business Development Matthew Kapusta joined AngioDynamics in November 2011 as a seasoned executive who has advised on more than 50 transactions valued at over $6 billion.
Financials
The company reported the first quarter fiscal year 2013, which ended August 31, financial results on October 8 with the following highlights:
| Revenue | $83.4 million |
| Net loss | $0.7 million |
| Cash | $33.0 million |
| Debt | $140.6 million |
Outlook
The company's fiscal year 2013 guidance is as follows.
| Revenue | $361-$364 million |
| EPS [GAAP] | $0.12-$0.14 |
| EPS [Non-GAAP] | $0.40-$0.42 |
Competition
AngioDynamics' main competitor is CR Bard (BCR). Here is a table comparing these two companies.
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AngioDynamics is currently trading below the industry average P/S ratio.
My analysis
The stock has a $9.5 price target from the Point and Figure chart. There have been 11 insider buy transactions and two insider sell transactions this year. There are 0 analyst buy ratings, six neutral ratings and one sell rating with a average target price of $13.17. The stock is trading at a forward P/E ratio of 18.32. The company has a book value of $15.05 per share. I have a bullish bias for the stock currently.
5. Endo Health Solutions (ENDP) is a U.S.-based diversified healthcare company that is redefining healthcare value by finding solutions for the unmet needs of patients along care pathways for pain management, pelvic health, urology, endocrinology and oncology. Through its operating companies: AMS, Endo Pharmaceuticals, HealthTronics and Qualitest, Endo is dedicated to improving care through a combination of branded products, generics, devices, technology and services that creates value for patients, providers and payers alike.
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Insider buys
- David Holveck purchased 7,425 shares on November 12 and 8,550 shares on June 12. David Holveck currently holds 31,497 shares of the company. David Holveck is President, Chief Executive Officer and a Director of Endo.
- Alan Levin purchased 3,200 shares on June 15. Alan Levin was appointed Executive Vice President and Chief Financial Officer in June 2009.
Financials
The company reported the third-quarter financial results on November 5 with the following highlights:
| Revenue | $750.5 million |
| Net income | $53.8 million |
| Cash | $256.9 million |
| Debt | $3.1 billion |
Outlook
For the full year ended Dec 31, 2012, Endo estimates:
- Total revenue of approximately $3.05 billion
- Total Endo Pharmaceuticals segment revenue of approximately $1.665 billion
- Total Qualitest segment revenue of approximately $660 million
- Total AMS segment revenue of approximately $510 million
- Total HealthTronics segment revenue of approximately $220 million
- Reported [GAAP] diluted earnings per share to be between $0.87 and $0.97
- Adjusted diluted earnings per share to be between $5.00 and $5.10
- Cash flow from operations of at least $600 million
- Capital expenditures to be approximately $120 million
The company's 2012 guidance is based on certain assumptions including:
- Adjusted gross margin of between 68 percent and 69 percent
- Adjusted effective tax rate of between 30.5 percent and 31.5 percent
- Weighted average number of common shares outstanding of approximately 120 million shares for the year ended Dec 31, 2012
Competition
Endo Health Solutions' competitors include Abbott Laboratories and Pfizer (PFE). Here is a table comparing these companies.
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Endo Health Solutions' P/S multiple is below the industry average.
My analysis
The stock has a $24 price target from the Point and Figure chart. There have been three insider buy transactions and there has been one insider sell transaction this year. There are nine analyst buy ratings, ten neutral ratings and 0 sell ratings with a average target price of $40.00. The stock is trading at a P/E ratio of 293.33 and a forward P/E ratio of 5.07. The company has a book value of $16.38 per share. I have a cautiously bullish bias for the stock currently.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in HALO over the next 72 hours.
