Raymond James Top Health Care Picks Crushing S&P 500: 4 Stocks to Buy Now

By Lee Jackson Published Dec 3, 7:59AM EST

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Raymond James Top Health Care Picks Crushing S&P 500: 4 Stocks to Buy Now — © Hiraman / Getty Images

The health care sector as a whole has been a top performer this year, and there is every reason to believe that strong performance will carry through to 2021. While most of the excitement has centered around the COVID-19 vaccine and a final FDA approval for both emergency and full population use, many other areas within the sector are also flourishing.
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The top health care picks from the Raymond James team had an outstanding November, posting a 17.2% gain compared with the overall sector gain of 7.8%, which lagged the S&P 500’s gain for the month of 10.89%. The analysts noted this when discussing the firm’s strong results:

Year-to-date, our list is up +12.7%. The strong November performance puts it ~60 basis points ahead of the broader market and over 5% ahead of the healthcare sector. As a reminder, the healthcare sector is +7.4% year-to-date and the broader market is +12.1%.

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We screened the Raymond James Top Picks list for the stocks that were rated Strong Buy, and we also looked for some of the more conservative ideas as the market is very overbought. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Acadia Pharmaceuticals

This stock helped to drive the strong outperformance from the firm’s Top Picks list for November. Acadia Pharmaceuticals Inc. (NASDAQ: ACAD | ACAD Price Prediction) is focused on the development of therapeutics to treat central nervous system disorders.

The company’s lead asset, Nuplazid (pimavanserin), has been approved for the treatment of Parkinson’s disease psychosis. Nuplazid is also in development for the treatment of dementia-related psychosis and schizophrenia negative symptoms. Acadia Pharmaceuticals also is developing an early-stage pipeline in acute and chronic pain and other central nervous system disorders.

The company reported that third-quarter Nuplazid sales came in at a very strong $120.6 million (10% growth quarter over quarter) as specialty pharmacy channels continue to see growth. In addition, ACP-044 (from CerSci) is expected to enter Phase 2 trials for acute and chronic pain in the first half of 2021.

Raymond James has set a $65 price objective for Acadia Pharmaceuticals stock. That compares with a Wall Street consensus target of $59.61, as well as Wednesday’s closing price of $54.73 per share.

CVS Health

This top stock gapped up in early November but has come back in and offers a much better entry point. CVS Health Corp. (NYSE: CVS) is one of the largest health care companies in the United States, providing retail, mail and specialty pharmacy dispensing services and pharmacy benefits. CVS has become one of the most vertically integrated publicly traded health care companies.

CVS serves employers, insurance companies, unions, government employee groups, health plans, prescription drug plans, Medicaid managed care plans, plans offered on public health insurance and private health insurance exchanges, other sponsors of health benefit plans and individuals. This segment operates retail specialty pharmacy stores and specialty mail order, mail order dispensing, and compounding pharmacies, as well as branches for infusion and enteral nutrition services.
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CVS completed a $69 billion purchase of health care provider Aetna in November of 2018 and remains one of the top picks for 2021 and beyond, as CVS has become one of the most vertically integrated publicly traded health care companies

Investors receive a 2.87 % dividend. The Raymond James price target is $90, while the posted consensus target was last seen at $81.71. CVS Health stock closed Wednesday’s trading at $69.63 per share, after a solid 3% gain on the day.
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Healthcare Realty Trust

This medical real estate investment trust (REIT) has pulled back recently after a big move and is an outstanding idea for conservative investors looking for sector exposure and income. Healthcare Realty Trust Inc. (NYSE: HR) integrates owning, managing, financing and developing income-producing real estate properties associated primarily with the delivery of outpatient health care services throughout the United States.

As of March 31, 2020, the company owned 212 real estate properties in 25 states, totaling 15.8 million square feet, and was valued at approximately $5.3 billion. The company provided leasing and property management services to 12.0 million square feet nationwide.

Investors receive a very solid 4.05% distribution. The $35 Raymond James price objective compares to a posted consensus target price of $31.58. Healthcare Realty Trust stock closed at $29.55 on Wednesday.
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UniQure

This is an off-the-radar idea for investors who are more aggressive. UniQure N.V. (NASDAQ: QURE) is a gene therapy company that engages in the development and commercialization of treatments for patients suffering from genetic and other diseases in the Netherlands. Its lead program is Etranacogene dezaparvovec (AMT-061), which is in Phase 3 HOPE-B pivotal trial for the treatment of hemophilia B.

The company also engages in developing the following:

AMT-130, a gene therapy that is in Phase 1 and 2 clinical study for the treatment of Huntington’s disease
AMT-060, which is in Phase 1 and 2 clinical trials for the treatment of hemophilia B
AMT-180, a one-time intravenously administered gene therapy candidate, which is in preclinical stage for the treatment of hemophilia A
AMT-190, an IV-administered adeno-associated virus 5-based gene therapy for the treatment of Fabry disease

The Raymond James analysts have a $75 price objective. The consensus target price is $70.67, and the final closing print for UniQure stock on Wednesday was $50.67 a share.
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These are four of the highest-ranked health care ideas from the Raymond James Top Picks list. Two of them that are ideal for more conservative investors who are looking to add plays in the sector but would like to avoid the risk of clinical disappointments. All these companies look poised for a strong 2021 and their shares merit some strong consideration.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.