It is no secret that health care companies, particularly biotech, have been under pressure. Some of these stocks may have even become oversold. Independent research firm Argus has reviews of three of health care picks from its own Focus List in which it still sees significant upside ahead.

Argus still has an Overweight rating on health care stocks in general. With a weighting of just over 15% of the S&P 500, the recent selling pressure may be an opportunity for more nimble investors who don’t get caught up in quick rounds of pressure.

Argus thinks that the group can continue to benefit from its perceived insulation from economic turbulence. The larger pool of insured people under the Affordable Care Act should support further gains.

Tuesday’s report for the health care sector sees what was a prior outperformance continuing ahead. Argus sees health care fundamentals being reasonable, with general sector debt ratios being low.

Amgen

Amgen Inc. (NASDAQ: AMGN) was shown to have solid growth prospects, and the company was said to be doing a good job of launching its next generation of blockbuster drugs: Krypolis, Prolia, XGEVA and now Corlanor.

Another boost is that Amgen’s pipeline appears promising via drugs for high cholesterol and multiple myeloma. Even after the dividend was raised by 30%, Argus thinks more dividend hikes are in store. Amazingly, it has a $194 price target — almost $60 higher than now and almost $10 higher than the consensus target.

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Amgen shares were last seen up 3% at $136.00, with a consensus price target of almost $186 and a 52-week trading range of $127.67 to $181.81. Amgen’s market cap is still just over $100 billion, even after the big pullback.
Allscripts

Allscripts Healthcare Solutions Inc. (NASDAQ: MDRX) was recently raised at the firm to Buy from Hold, and Argus has a $17.00 price target. Its second-quarter new orders were up for a second straight quarter, while revenues declined at a slower rate.

Allscripts showed improved profitability, two major customers expanded their deployments of Sunrise Clinical Manager for ambulatory settings, and it was shown to have stronger growth prospects, compared with top peer Cerner. Argus also noted that the recent pullback in Allscripts shares since mid-July provides a favorable entry point.

Allscripts was last seen trading at $12.40, with a consensus price target of $15.52 and a 52-week trading range of $11.00 to $15.41. Its market cap is low at $2.3 billion.

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United Therapeutics

United Therapeutics Corp. (NASDAQ: UTHR) is the third Focus List stock from Argus in health care. The firm expects that a recently approved product will drive a new phase of revenue growth for the mid-cap biotech. Its primary drug is treprostinil, a synthetic form of prostacyclin that treats pulmonary arterial hypertension.

The company has expanded its PAH market with three forms of treprostinil, and Argus said that a pill is now adding to this franchise with its fourth product. United Therapeutics was also shown to have a clean balance sheet and attractive valuation, based on new revenue drivers.

Lastly, Argus noted that United Therapeutics is a potential takeover candidate during the continued health care consolidation wave. Argus’ last research report was at the end of July, and it gave a fair value of $200 per share for its target. That was down from $205 earlier.

United Therapeutics was last seen up almost 4% at $139.00, within a 52-week trading range of $118.47 to $190.29. Its consensus analyst price target is $175.33, and it has better than a $6.3 billion market cap.

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It is clear that even the top Focus List stocks can sell off handily. Now we just have to wait and see if Wall Street analysts and their price targets, particularly with more than a year until the next elections, can withstand political pressure continuing to hurt the group as a whole.

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