Analyzing 5 High Yield Healthcare Stocks For Buy Opportunities

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Includes: AZN, GSK, LLY, PDLI, SNY
by: Vatalyst

I perused the healthcare sector for solid dividend buy ideas. Here is my analysis:

Eli Lilly & Co (NYSE:LLY) - LLY stock has been bearish the past week, the stock hit a 52-week low of $33.46 and a high of $39.78. However LLY was among the top performers with a resistance levels at $33.75 and $36.45 respectively. A top performer in the industry is Teva (NASDAQ:TEVA) which closed the previous session at $ 40.59 representing 2.97% higher from previous trading.

This trend is likely to change in the coming weeks due to LLY getting approval from European regulators to market their type 2 diabetes drug Linaglipin. The financials look good with a ROI of 20.74 compared with the industry 7.12. However, with a P/E of 8.69 compared to the industry average of 21.49 it is relatively cheaper than competition.

I would recommend holding on the stock, given the developments in approval of the diabetes drug in the European market. LLY offers attractive earnings with an EPS of 4.26 compared to larger caps such as NVS and GSK at 2.06.

GlaxoSmithKline plc (NYSE:GSK) - GSK is a relatively safe bet given it has diversified to consumer products. GSK closed Wednesday at $43.36. It hit a 52 week low of $36.28 and a high of $45.34. Technical indicators are bullish despite the industry posting mixed performance in Q2; Standard and Poor's (MHP) gives GSK a neutral 3 STAR (out of 5) hold rating.

GSK remains attractive given its dividend yield of 0.52 for the last quarter with other competitors such as LLY at 0.49 and PFE at 0.16. GSK has a P/E ratio of 20.69 against an industry average of 12.97 compared to other players in the Industry such as Novartis (NYSE:NVS), Pfizer (NYSE:PFE) and Sanofi (NYSE:SNY).

This indicates that investors still believe that the stock is a good buy especially due to the recent acquisition of a minority stake in Autifony Therapeutics Limited, a UK-based biotechnology firm. This is a definite hold.

Sanofi SA (SNY) - SNY closed Wednesday at $36.54 up from $36.08 from the previous trading period representing a 1.33% gain in value. In the past year the stock has hit a 52 week low of $28.49 and a High of $40.75.

Standard and Poor's gives SNY a neutral 3 Stars out of a possible 5 holding rate, indicating that it may not be a good buy; also the financials do not look good with Q2 revenues dipping 5% (y.o.y). The P/E is 15.47 the lowest among its competitors GSK, MRK and PFE.

The company has identified its key growth platforms as emerging markets, human vaccines, consumer healthcare and new products and animal health which are not reflected in last year financials.

PDL BioPharma Inc (NASDAQ:PDLI) – PDLI closed Tuesday at $6.01 hitting a high of $6.05 and a low of $5.93 against a volume of 1.3 million shares traded. The stock has hit a 52 week low of $ 4.66 and a high of $ 6.1 and is currently trading at $5.99 on Wednesday trade.

EVA Dimensions LLC have upgraded the stock to buy from overweight, this is despite the announcement made two weeks ago that Roche Holdings may stop certain royalty payments due to a patent dispute. The stock has made a slow but steady climb week on week from $ 5.76 to close at $5.75 on Tuesday representing a 3% rise. A comparison of Q2 financials against competitors shows that Seattle Genetics (NASDAQ:SGEN) quarterly revenues fell 64% while those of PDLI grew 1.5%.

The EPS year on year jumped from 0.35 to 0.39 which is also below the EPS of AMGN which is 4.81

AstraZeneca plc (NYSE:AZN) – AZN closed on Wednesday on a positive note at $47.12 The stock has hit a 52 week low of $40.89 and a 52 week high of 53.5. With a P/E ratio of 8.20 against an industry average of 12.97 the stock is relatively cheap as compared to competitors, however the stock offers attractive earnings with an EPS of 5.78 compared to the industry average if 1.96.

AZN had completed the sale of Astra's tech business to DENTSPLY International (NASDAQ:XRAY) for $1.8 billion this will definitely drive gains in the coming weeks.

This is definitely a stock to pick given the gains made through the week.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.