On my way out to San Francisco last week, I never thought that I’d compare the biggest healthcare conference of the year to the dating scene.
But that’s the overall vibe that I took away from the JP Morgan Healthcare Conference. The investors I spoke with reminded me of jilted lovers – eager to get back on the market, but scared to get hurt again.
Rather than checking out the eligible candidates on Match.com, though, healthcare investors spend their time poring over companies’ balance sheets and drug pipelines.
And so it was in San Francisco. Everyone wanted to be optimistic, but that optimism was only expressed in private conversations. When I saw the same investors in front of companies’ management teams, they were extremely guarded and non-committal…
Short-Term: Buy… Long-Term: Sell
Take Keryx Biopharmaceuticals (Nasdaq: KERX), for example…
In response to my column on the JP Morgan Healthcare Conference last week, I received a couple of questions about the prospects for Keryx. So I made sure I got myself into a private lunch with the management team and investors.
The investors were intrigued by the story, but weren’t especially enthusiastic or receptive about putting money into the stock.
At the moment, the firm is progressing with clinical trials for KRX-0401 and Zerenex. It’s quite possible that both will see positive Phase II results in the near future.
However, I’m not convinced that Zerenex will be a huge commercial success if it’s approved. Compared to Genzyme’s (Nasdaq: GENZ) Renagel, Zerenex seems like a “me too” drug, but without enough benefits to differentiate itself.
I still need to do more work on the company, but my initial impression is that while I think KERX could be an interesting short-term buy opportunity, it could also be an interesting short-sell if Zerenex gets approved.
In other words, Keryx is likely not Mr. Right, but could be Mr. Right Now.
Here are some better long-term healthcare stocks…
Add These Three Stocks to Your Healthcare Watchlist
Ever had a friend who has the looks and personality to land a partner, but just can’t seem to find one?
In the healthcare world, that friend would be Haemonetics (NYSE: HAE).
The company has a terrific razor/razorblade business model, generates cash and is growing steadily, yet you never hear about the stock. The main issue at the moment is that it’s a bit pricey, but keep this one on your long-term radar.
Stock Makeover: Healthcare Edition
If you’re looking for turnaround stories, check out Genzyme and Questcor (Nasdaq: QCOR). Both stocks have endured a rough time since September, but if their makeovers go well, they could generate significant returns for patient investors.
After four days at the “meet market,” I’ve got more phone numbers than a single doctor at a Hadassah meeting. Over the next several weeks, I’ll be doing tons of research on the companies that I saw and met with. Some will likely wind up in the White Cap Portfolio or in my small-cap healthcare and biotech service, Access.
P.S: Are you an investor in any of the companies mentioned above? Are you familiar with their stories and agree/disagree with my thoughts here? Feel free to leave your comments/questions below.And if you’d like to get the names of all my healthcare and biotech investments – plus get all the latest small-cap recommendations from my colleague Louis Basenese and me the minute they go to press – get yourself on board with The White Cap Report team. It’s risk-free, so you’ve got nothing to lose. Become a member of the “White Cap Nation.”
Disclosure: No positions