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Jefferies: 15 Global Healthcare Stocks Post-Pandemic Investing

Jefferies: 15 Global Healthcare Stocks Post-Pandemic Investing

By    |   Friday, 15 May 2020 02:36 PM

The coronavirus pandemic has cast a spotlight on stocks in the healthcare sector, home to the companies that could develop treatments, vaccines and improved diagnostics needed to tackle the greatest public health crisis in a century.

And while healthcare companies look like obvious beneficiaries as the world slowly recovers from the coronavirus pandemic, Barron's recently urged investors to understand it’s not a matter of buying just any company.

Analysts at Jefferies, led by James Vane-Tempest, recently suggested to Barron’s the best global healthcare stocks poised for future profit. “We expect regulations to be supportive of greater use of predictive diagnostics & the global physician community to continue to embrace the surge in demand for telemedicine,” Vane-Tempest told the financial publication.

Among the healthcare-services companies Jefferies suggests are:

  • Medicover (MCVEY)
  • Fresenius Medical Care (FMS)
  • Sonic Heathcare (SKHHY)
  • Centene (CNC)
  • Cerner (CERN)
  • Teladoc Health (TDOC).

In the pharmaceutical sector, Jefferies analysts prefer integrated players with a bias toward chronic medications and bigger names that should benefit from scale in any digital evolution:

  • GlaxoSmithKline (GSK)
  • Sanofi (SNY)
  • Takeda Pharmeceutical (TAK)
  • Shionogi (SGIOY).

The Jefferies team also examined medical technology and tools, and among the suggestions:

  • Coloplast (CLPBY)
  • ConvaTec Group (CNVVY)
  • Bio-Rad Laboratories (BIO)
  • Danaher (DHR)
  • Thermo Fisher Scientific (TMO).

Meanwhile, the healthcare sector is typically considered to be a reliable, steady performer because some investors believe consumers will continue buying healthcare products even during uncertain times, Reuters recently explained.

“In general, if you are on a drug, you are staying on that drug,” said Teresa McRoberts, a portfolio manager who focuses on healthcare at Fred Alger Management. “So that part of their business is pretty safe.”

However, healthcare lagged the market’s big gains in 2019. Institutional investors generally held a lower weighting in healthcare relative to benchmark indexes before the pandemic took hold this year, said Rebecca Chesworth, senior equities strategist at State Street Global Advisors. Healthcare “has been one of the most popular places to put money in the past couple of weeks,” she added.

Some areas of the sector have been hit hard by the vast ripple effects of the virus, particularly medical-device companies dependent on elective procedures that are being delayed to preserve hospital capacity and resources for coronavirus patients. 

Hospitals have lost high-margin elective procedures and have been forced to cope with severe disruption from the influx of coronavirus patients, said Jeff Jonas, healthcare portfolio manager with Gabelli Funds. Jonas, however, believes those areas could be quicker to recover than other parts of the economy when the pandemic recedes.

“You’re going to be more nervous about getting on a plane, staying in a hotel, going out to dinner in the aftermath of this then you are about going back to see your doctor or to get a procedure done,” he said.

Meanwhile, venture capitalists have poured $42 billion into drug development over the past three years, but yet nearly half the money has flooded into cancer and rare diseases with expensive cures, Bloomberg recently explained.

Only about $2.2 billion, or 5% of the total, went to drugs that prevent infections, according to a tally by Silicon Valley Bank, which offers banking services to venture-backed companies and others.

The seemingly endless coronvirus crisis is expected to change that investment trend.

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Global healthcare companies look like obvious beneficiaries as the world slowly recovers from the coronavirus pandemic .
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Friday, 15 May 2020 02:36 PM
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