Health and Healthcare

Raymond James 4 Analyst Favorite Health Care Picks With Huge Upside Potential

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For the first time in years, for 2019 active managers are outperforming index funds, and that should be a loud wake-up call to passive investors. After a more than 10-year bull market, the bull is tired. Although central banks are still providing a liquidity security blanket, and interest rates remain at generational lows, this looks to many on Wall Street like the proverbial stock pickers market.

That being the case, many portfolio managers and investors are looking for stocks that can outperform into year-end and generate a little finish line alpha to what has been a great year. The analysts at Raymond James were all asked to submit their favorite stock pick. Analysts may only have one “buy” idea (from their stocks under coverage rated Strong Buy or Outperform) on the list at any given time.

We screened the list for companies with big upside to the Raymond James price target, and found four health care stocks that look like solid picks for the fourth quarter and into 2020.

Becton Dickinson

This top health care stock is a solid and safer play now. Becton Dickinson and Co. (NYSE: BDX) is a diversified global medical technology company that produces medical devices, instrument systems and reagents for the health care, life sciences research, clinical, diagnostic and pharmaceutical markets.

The company has grown into a large medical conglomerate with over 49,000 employees covering nearly 50 countries worldwide. The CareFusion acquisition in 2015 significantly expanded the company’s medical technology footprint in infusion and medication management.

This week the company came out with quarterly earnings that beat the consensus estimates and were solidly higher than a year ago.

Shareholders receive a 1.22% dividend. The Raymond James price target for the shares is $288, and the Wall Street consensus target is $267.38. The shares closed Tuesday’s trading at $246.68.

Boston Scientific

This top medtech company has remained on a slow and steady grind higher over the past five years. Boston Scientific Corp. (NYSE: BSX) develops, manufactures and markets medical devices that are used in interventional cardiology, peripheral interventions, vascular surgery, electrophysiology, neurovascular interventional, oncology, endoscopy, urology, gynecology and neuromodulation.

Raymond James and other Wall Street analysts have become increasingly bullish on the company’s earnings prospects. In fact, earnings estimates for the fourth quarter have increased by 15%, and full-year forecasts for 2019 and 2020 each have been raised by a penny per share.

Raymond James has a $48 price target, while the consensus target is $35.39. Shares closed at $40.60 on Tuesday.

CareDx

This rather off-the-radar clinical play was hit hard recently and has massive upside to the Raymond James price objective. CareDx Inc. (NASDAQ: CDNA) is a leading precision medicine solutions company focused on the discovery, development and commercialization of clinically differentiated, high-value health care solutions for transplant patients and caregivers.

CareDx offers testing services, products and digital health care solutions along the pre- and post-transplant patient journey, and it is the leading provider of genomics-based information for transplant patients.

Revenue for the most recently reported period was up nearly 60% year over year to $33.8 million, due in part to strong growth in testing services revenue and recent acquisitions of OTTR and XynManagement.

The massive $50 Raymond James price target compares to the $49.20 consensus figure. Shares were last seen at $19.95.

Gilead Sciences

This stock is trading at a very reasonable 9.55 times estimated 2019 earnings. Gilead Sciences Inc. (NASDAQ: GILD) is a biopharmaceutical company that discovers, develops and commercializes therapies for the treatment of HIV/AIDS, liver disease, cancer and inflammation. The acquisition of Kite Pharmaceutical in 2017 allowed for entry into the CAR-T space, indicating a renewed focus in oncology.

The company’s products include Stribild, Complera/Eviplera, Atripla, Truvada, Viread, Emtriva, Tybost and Vitekta for the treatment of human immunodeficiency virus (HIV) infection in adults; and Harvoni, Sovaldi, Viread and Hepsera products for the treatment of liver disease.

Investors receive a 3.86% dividend. The Raymond James price objective is $81. The consensus price target is $80.45, and shares closed at $65.39.

These four Raymond James analyst favorite health care stock picks have substantial upside potential to their price targets. While more suited for growth accounts with higher risk tolerance, they all make good portfolio additions at current price levels.

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