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Health Care / Pharma Stocks 3/01/16

Why has this sector been under the weather recently? I am not an expert on this sector - but two things stand out to me. Sector average dividend growth over the LTM has not been good. And EPS growth (as shown in the second spreadsheet) has been sub ten percent. This growth sector has not been growing as fast as normal. Most of that is the currency conversion effect on EPS. With the rest of the world having economies less health than the USA - that currency problem will probably be with us again in 2016.

Health Care / Pharma Stocks 3-01-16

Yield in the spreadsheet below is based on the Q1-16 dividend. Spreadsheet header abbreviations: Div = dividend; EPS = earnings per share; LTM = last twelve months; YTD = year to date. The dividend to EPS ratio is a measure of dividend safety. At this point in time, companies that pay dividends once per year have had their payouts divided by four and encoded in this data as if they paid a quarterly dividend. AZN pays two unidentical dividends per year. I take the sum of those dividends and divide by four to get a run rate dividend per quarter. The last four columns measure the percentage change in the 2015 EPS projection; the change in the price target since the beginning of the year; the change in the dividend since Q1-15; and the average yearly change in the dividend since Q1-13. AZN had a two for one stock split on 7-27-15 - and that change is not yet reflected in the data. ABT has raised its Q1-16 dividend to $0.26/share. SYK raised to $0.38/share. AMGN has raised its Q1-16 div to $1.00/share. PFE raised to $0.30/share. PRGO raised to $0.145/share. STJ raised to $0.31/share. ZBH raised the dividend earned in Q1 but paid in Q2 to $0.24/share. GILD will increase its Q2-16 dividend to $0.47/share.


    Div Current Div/ Div/ Percent Change
Company and ticker Price /Quarter Yield EPS16 EPS17 Price Pr+Div EPS16 Target Div 1yr Div 3yr

Agilent Technologies (NYSE:A) 38.59 0.115 1.19 24.6% 21.3% -7.70 -7.43 -1.58 -1.31 15.00 10.32
AbbVie Inc. (NYSE:ABBV) 56.34 0.510 3.62 40.5% 34.1% -4.90 -4.03 0.60 -1.22 4.08 8.86
AmerisourceBergen Corporation (NYSE:ABC) 87.43 0.340 1.56 23.5% 21.1% -15.70 -15.70 -0.86 -9.96 17.24 17.52
Abbott Laboratories (NYSE:ABT) 39.33 0.260 2.64 48.1% 39.8% -12.42 -11.89 -9.24 -14.40 8.33 24.86
Amgen Inc. (NASDAQ:AMGN) 148.39 1.000 2.70 37.0% 26.1% -8.59 -8.59 1.60 -4.01 26.58 28.63
AstraZeneca PLC (NYSE:AZN) 58.04 0.700 4.82 69.3% 51.5% -14.52 -14.52 -2.88 -0.73 0.00 0.00
Baxter International Inc. (NYSE:BAX) 39.98 0.282 2.83 74.8% 63.5% 4.80 5.54 5.59 2.25 0.00 5.00
Bayer AG (OTCPK:BAYRY) 107.24 0.638 2.38 31.7% 29.1% -14.09 -14.09 -0.12 -10.33 0.00 16.12
CR Bard Inc. (NYSE:BCR) 194.50 0.240 0.49 9.6% 8.7% 2.67 2.80 0.71 0.35 9.09 6.28
Becton, Dickinson and Company (NYSE:BDX) 150.12 0.660 1.76 31.4% 25.5% -2.58 -2.58 0.24 -0.92 10.00 10.06
Bristol-Myers Squibb Company (NYSE:BMY) 64.22 0.380 2.37 63.9% 48.7% -6.64 -6.11 3.93 -0.20 2.70 2.78
Cardinal Health, Inc. (NYSE:CAH) 82.88 0.387 1.87 29.3% 25.9% -7.16 -6.72 -0.38 -4.10 12.83 12.07
Quest Diagnostics (NYSE:DGX) 68.48 0.380 2.22 30.1% 28.4% -3.74 -3.20 -0.59 0.66 15.15 8.38
Gilead Sciences Inc. (NASDAQ:GILD) 89.69 0.430 1.92 14.1% 13.9% -11.36 -11.36 1.58 -7.01 0.00 na
GlaxoSmithKline PLC (NYSE:GSK) 39.66 0.592 5.97 92.1% 89.7% -1.71 -0.24 0.00 2.45 -14.82 -4.43
Johnson & Johnson (NYSE:JNJ) 107.22 0.750 2.80 46.0% 43.5% 4.38 4.38 1.72 0.31 7.14 7.13
Eli Lilly and Company (NYSE:LLY) 72.74 0.510 2.80 57.6% 50.4% -13.67 -13.67 -3.54 -1.75 2.00 1.35
McKesson Corporation (NYSE:MCK) 156.65 0.280 0.71 8.8% 8.3% -20.57 -20.43 -11.57 -11.39 16.67 12.22
Medtronic Inc. (NYSE:MDT) 74.18 0.380 2.05 34.7% 31.1% -3.56 -3.07 0.00 -0.26 24.59 13.74
Merck & Co. Inc. (NYSE:MRK) 51.75 0.460 3.56 49.7% 47.6% -2.03 -1.17 -1.33 -2.62 2.22 2.27
Novo Nordisk A/S (NYSE:NVO) 53.15 0.182 1.37 32.6% 31.1% -8.49 -8.49 -0.88 0.00 -3.95 5.99
Novartis AG (NYSE:NVS) 72.84 0.667 3.67 54.2% 52.3% -15.34 -14.52 -6.81 -7.35 -5.21 1.95
Pfizer Inc. (NYSE:PFE) 30.04 0.300 3.99 52.6% 45.3% -6.94 -6.07 -3.39 -3.56 7.14 7.72
Perrigo Company PLC (NASDAQ:PRGO) 126.21 0.145 0.46 6.1% 4.7% -12.78 -12.78 -0.52 -12.62 16.00 17.24
Roche Holding AG (OTCQX:RHHBY) 32.60 0.250 3.07 53.5% 53.9% -5.43 -5.43 -4.10 -1.79 -7.75 3.04
Sanofi (NYSE:SNY) 40.22 0.402 4.00 50.6% 50.2% -5.70 -4.75 2.91 -6.40 0.00 -4.41
St. Jude Medical Inc. (NYSE:STJ) 54.13 0.310 2.29 31.2% 26.7% -12.37 -11.90 -6.35 -13.48 6.90 7.43
Stryker Corporation (NYSE:SYK) 100.92 0.380 1.51 27.3% 25.0% 8.59 9.00 -0.54 1.53 10.14 12.78
Teva Pharmaceutical Industries (NYSE:TEVA) 56.10 0.340 2.42 23.7% 21.8% -14.53 -14.53 -1.71 -1.60 -0.00 3.15
Thermo Fisher Scientific, Inc (NYSE:TMO) 135.28 0.150 0.44 7.6% 6.8% -4.63 -4.53 -3.41 -0.89 0.00 0.00
Zimmer Biomet Holdings, Inc. (NYSE:ZBH) 97.39 0.220 0.90 11.2% 10.1% -5.07 -4.85 0.77 -0.63 0.00 3.33
Zoetis Inc. (NYSE:ZTS) 42.10 0.095 0.90 21.3% 14.7% -12.15 -12.15 -7.77 -2.90 15.15 13.49

Average       2.35 37.1% 33.3% -7.31 -6.97 -1.50 -3.56 6.16 8.22

With the 10 Treasury at 1.8% and the sector average yield on Q1 dividends at 2.35% - the spread is 55 basis points.
The cap weighted ETF XLV is up -6.08% year to date - with dividends included, its total return is -6.08%.
The yield on the XLV is 1.46% using the sum of LTM dividends - while LTM dividend growth is 11.61%.

Earnings Growth & P/E Ratios 03-01

Fiscal and calendar years are not in sync. ABC, BDX, CAH, MCK, MDT and PRGO began fiscal 2015 at least one quarter earlier than calendar 2015. Several stocks sell at valuations based on their drug pipelines - and short-term growth in EPS fails to capture a growth picture which is expected to come in 2016 and beyond. BMY is a good example. 2017 EPS projection along with the 2016 projections for GSK and NVO are from NASDAQ. The rest of the projections are from Yahoo Finance.


  Earnings / Share Earn. Growth P/E Ratios 16 EPS Range
Co. 2011 2012 2013 2014 2015 2016 2017 13-14 14-15 15-16 2014 2015 2016 High Low Range

A 295 312 288 304 174 187 216 5.56% -42.76% 7.47% 12.69 22.18 20.64 192 187 2.87%
ABBV 0 0 314 332 429 504 599 5.73% 29.22% 17.48% 16.97 13.13 11.18 510 494 3.73%
ABC 251 276 314 397 496 578 646 26.43% 24.94% 16.53% 22.02 17.63 15.13 580 575 1.01%
ABT 0 174 201 228 215 216 241 13.43% -5.70% 0.47% 17.25 18.29 18.21 220 211 4.19%
AMGN 533 651 760 870 1038 1082 1209 14.47% 19.31% 4.24% 17.06 14.30 13.71 1154 1060 9.06%
AZN 733 641 506 428 424 404 544 -15.42% -0.93% -4.72% 13.56 13.69 14.37 428 392 8.49%
BAX 234 246 254 266 138 151 178 4.72% -48.12% 9.42% 15.03 28.97 26.48 154 148 4.35%
BAYRY 0 688 745 799 763 805 876 7.25% -4.51% 5.50% 13.42 14.06 13.32 826 814 1.57%
BCR 640 657 578 840 908 997 1104 45.33% 8.10% 9.80% 23.15 21.42 19.51 1003 987 1.76%
BDX 533 537 581 625 716 842 940 7.57% 14.56% 17.60% 24.02 20.97 17.83 850 838 1.68%
BMY 228 199 182 185 201 238 304 1.65% 8.65% 18.41% 34.71 31.95 26.98 246 211 17.41%
CAH 267 321 373 384 438 528 597 2.95% 14.06% 20.55% 21.58 18.92 15.70 533 520 2.97%
DGX 285 392 400 410 477 505 535 2.50% 16.34% 5.87% 16.70 14.36 13.56 515 468 9.85%
GILD 181 171 201 809 1261 1220 1241 302.49% 55.87% -3.25% 11.09 7.11 7.35 1343 1116 18.00%
GSK 325 353 373 296 232 257 264 -20.64% -21.62% 10.78% 13.40 17.09 15.43 261 253 3.45%
JNJ 500 510 552 597 620 652 690 8.15% 3.85% 5.16% 17.96 17.29 16.44 668 640 4.52%

  Earnings / Share Earn. Growth P/E Ratios 16 EPS Range
Co. 2011 2012 2013 2014 2015 2016 2017 13-14 14-15 15-16 2014 2015 2016 High Low Range

LLY 441 339 415 278 343 354 397 -33.01% 23.38% 3.21% 26.17 21.21 20.55 361 346 4.37%
MCK 486 638 633 835 1111 1277 1354 31.91% 33.05% 14.94% 18.76 14.10 12.27 1282 1274 0.72%
MDT 337 346 375 382 428 438 488 1.87% 12.04% 2.34% 19.42 17.33 16.94 447 434 3.04%
MRK 377 382 349 349 359 370 378 0.00% 2.87% 3.06% 14.83 14.42 13.99 380 361 5.29%
NVO 102 142 167 162 201 224 244 -2.99% 24.07% 11.44% 32.81 26.44 23.73 229 223 2.99%
NVS 378 389 501 523 483 493 539 4.39% -7.65% 2.07% 13.93 15.08 14.77 535 470 13.46%
PFE 231 219 222 226 220 228 247 1.80% -2.65% 3.64% 13.29 13.65 13.18 243 224 8.64%
PRGO 401 499 561 639 773 953 1062 13.90% 20.97% 23.29% 19.75 16.33 13.24 1000 944 7.24%
RHHBY 140 162 156 156 175 187 201 0.00% 12.18% 6.86% 20.90 18.63 17.43 193 178 8.57%
SNY 348 319 340 345 282 318 320 1.47% -18.26% 12.77% 11.66 14.26 12.65 320 317 1.06%
STJ 328 239 376 398 394 398 434 5.85% -1.01% 1.02% 13.60 13.74 13.60 405 395 2.54%
SYK 372 407 423 473 512 557 609 11.82% 8.25% 8.79% 21.34 19.71 18.12 570 550 3.91%
TEVA 497 535 501 507 542 574 624 1.20% 6.90% 5.90% 11.07 10.35 9.77 655 505 27.68%
TMO 416 494 542 696 739 793 876 28.41% 6.18% 7.31% 19.44 18.31 17.06 820 785 4.74%
ZBH 480 530 575 606 690 787 867 5.39% 13.86% 14.06% 16.07 14.11 12.37 794 774 2.90%
ZTS 0 108 142 153 173 178 225 7.75% 13.07% 2.89% 27.52 24.34 23.65 198 185 7.51%

Sector Average           15.37% 6.83% 8.28% 18.47 17.61 16.22     9.74

Disclosure: I am/we are long ABC, ABT, AMGN, GILD, STJ, SYK.