The healthcare sector received a lot of attention from investors during the early days of the COVID-19 pandemic. Interest in space has waned a bit in recent months, but a new catalyst may be on the way.
Top Democrats in the Senate recently proposed a new $21 billion emergency funding bill to prepare for the next phase of the pandemic and other emerging diseases.
The bill would allocate $16 billion to the Public Health and Human Services Emergency Fund for testing, vaccines, medical supplies and research. Another $5 billion in emergency funding is aimed at helping other countries fight the coronavirus.
“Our efforts to stop this disease abroad to protect us here at home are quickly running out of funds and we are running out of time to act,” Patrick Leahy, chairman of the Senate Appropriations Committee, said in a statement.
The bill can give investors a new reason to check out companies that make vaccines, develop treatments or produce antigen tests. Here’s a look at three of them.
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With a history that can be traced back to 1849, Pfizer is a mega-capitalization pharmaceutical and biotechnology company. The pandemic has made it even more famous globally.
Over 3.6 billion Pfizer-BioNTech vaccines against COVID-19 have been delivered to 180 countries worldwide. Meanwhile, Pfizer is also the developer of Paxlovid, an oral antiviral pill used to treat COVID-19.
The company reported strong results this earnings season. For the second quarter, Pfizer generated $27.7 billion in revenue, a 47% increase over the previous year. Adjusted earnings per share were $2.04, up 92% from the prior period.
However, the stock is not immune to the market selloff in 2022. Pfizer shares are down 13% year-to-date.
JPMorgan analyst Chris Schott has a “neutral” rating on Pfizer and a $57 price target — roughly 15% above today’s share price.
Gilead Sciences (GILD)
Gilead Sciences is another biopharmaceutical company that made headlines during the pandemic. He is the developer of Veklury (remdesivir), the first antiviral drug approved by the FDA to treat COVID-19 requiring hospitalization.
The company reported second-quarter earnings earlier this month. For the quarter, revenue rose 1% year over year to $6.3 billion. Adjusted earnings per share fell 13% year over year to $1.58.
While those numbers don’t look impressive in themselves, they beat Wall Street’s expectations. Analysts on average expected Gilead to post earnings of $1.52 per share on revenue of $5.86 billion for the quarter.
Management also strengthened its guidance. For all of 2022, they expect the company to earn $24.5 billion to $25 billion in total product sales, up from their previous guidance range of $23.8 billion to $24.3 billion.
Shares rose after the earnings release. However, it is still down 10% year to date.
Piper Sandler analyst Do Kim recently reiterated a “neutral” rating on Gilead, while raising his price target to $74 from $71. Given that Gilead is trading around $65 today, the price target suggests a potential upside of 14%.
Abbott Laboratories (ABT)
Abbott Laboratories is a healthcare company that specializes in medical devices, diagnostics, nutritional products and branded generic drugs.
Like the other two companies, Abbott was not hot ticker. Its shares fell a painful 21% in 2022.
But the company is well-positioned for another wave of COVID-19 — it manufactures COVID-19 testing kits.
Sales related to COVID-19 testing totaled $2.3 billion for Abbott in the second quarter of 2022, according to its latest earnings report.
Sales totaled $11.3 billion for the quarter, an increase of 10.1% year-over-year. Adjusted earnings per share rose 22.2% year-over-year to $1.43.
Management expects the company to earn $6.1 billion in sales related to COVID-19 testing in all of 2022.
Citi analyst Joan Wuensch has a “buy” rating on Abbott and a $123 price target — about 12% above current levels.
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