The Week Ahead In Healthcare

By Stephen D. Simpson, CFA | July 16, 2012 AAA

With earnings season kicking into high gear, the week of July 16 to July 20 promises a little more action for investors. Although healthcare earnings reports don't tend to spur the same sort of volatile trading action as tech earnings, investors will be keenly interested in what major companies like Johnson & Johnson (NYSE:JNJ), Stryker (NYSE:SYK) and St. Jude (NYSE:STJ) have to say about volume and pricing trends in healthcare.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Biotech/Pharma
Alnylam Pharmaceuticals
(Nasdaq:ALNY) opened the week with news early morning on July 17, 2012 of a successful Phase 1 trial of its experimental drug ALN-TTR02 for TTR-mediated amyloidosis. While this was an extremely small study (as most Phase 1 studies are), the maximum tested dosage saw a 94% TTR knockdown and a durable response (77% knockdown) one month after a single dose.

The underlying disease is very rare (an orphan drug disease along the lines of those addressed by companies such as Alexion (Nasdaq:ALXN) and Genzyme, but there are no medical treatment options other than liver transplant. Assuming ongoing success in clinical trials, Alnylam could have this drug on the market in 2015.

Elsewhere in pharmaceuticals and biotech, there are relatively few major earnings announcements expected this week, but the report from Forest Labs (NYSE:FRX) could be more interesting than normal. Carl Icahn and the management of Forest Labs are locking horns over Icahn's desire to appoint members of the board of directors, while the company continues to try to rebuild its revenue base after major revenue declines tied to big-selling drugs going off patent.

SEE: Earning Forecasts: A Primer

Is Ortho on the Way Back? What About Stents and ICDs?
Investors will get insight into three of the largest market segments of medical technology this week. With J&J and Stryker reporting their earnings, more insight on the orthopedics market should be forthcoming. Biomet encouraged the Street a few weeks ago with a stronger-than-expected earnings report, and relatively positive comments about patient/volume trends.

Likewise, Abbott (NYSE:ABT) will give investors a good look at the drug-coated stent market, while St. Jude will have something to say about the pacemaker and ICD markets. While Medtronic (NYSE:MDT) will not be reporting earnings for a while (the company is on an off-calendar cycle), the reports of J&J/Stryker (spine), Abbott (stents) and St. Jude (pacemakers/ICDs) will all be relevant to this large med-device company.

SEE: Investing In The Healthcare Sector

The Bottom Line
Healthcare stocks continue to outperform this year. The Health Care Select Sector SPDR (ARCA:XLV) is up 11.05% year-to-date, beating the 7.9% return of the S&P 500. The iShares Dow Jones US Pharmaceuticals ETF (ARCA:IHE) is up 15.39%, while the iShares Dow Jones US Medical Devices ETF (ARCA:IHI) is up 10.31%. The SPDR Biotech ETF (ARCA:XBI) has risen 37.4% year-to-date.

Stephen D. Simpson owns shares of Alnylam since April, 2010

comments powered by Disqus
Related Analysis
  1. This 6.5% Yielder Is Poised To Soar... Thanks To Its 'Stealth Catalyst'
    Investing

    This 6.5% Yielder Is Poised To Soar... Thanks To Its 'Stealth Catalyst'

  2. India Remains An Emerging Market Bright Spot
    Stock Analysis

    India Remains An Emerging Market Bright Spot

  3. Why There's Upside To Silver's Four-Year Lows
    Investing

    Why There's Upside To Silver's Four-Year Lows

  4. 4 Reasons To Love Monthly Dividend Payers
    Investing

    4 Reasons To Love Monthly Dividend Payers

  5. Still More Gains Ahead For Semiconductor Makers
    Stock Analysis

    Still More Gains Ahead For Semiconductor Makers

Trading Center