HCA and Tenet best positioned among among healthcare providers: Goldman Sachs
- In its take on healthcare service providers prior to Q2 earnings, Goldman Sachs observe slower-than-expected recovery in the subsector due to concerns over COVID-19 Delta variant and seasonality after a year of lockdown.
- “These factors push our recovery inflection expectations to 2022,” the analysts wrote, highlighting their unchanged views over the tailwinds of a material volume backlog expected in 2022 where HCA Healthcare (NYSE:HCA) and Tenet Healthcare (NYSE:THC) are best positioned.
Option Care Health raised to buy at Goldman Sachs
- In the report, Goldman Sachs has upgraded Option Care Health (NASDAQ:OPCH) to buy from neutral citing the firm’s increasing confidence over the fundamentals of the business in addition to the likely benefit from Biogen’s newly-approved Alzheimer’s therapy, Aduhelm.
- Despite the industry concerns, “we continue to see a significant opportunity for the drug class and thus optionality for OPCH,” the analysts wrote. The price target of Option Care raised to $25.00 from $20.00 implies a premium of ~25.1%.
- Last week, it was reported that The Cleveland Clinic and Mount Sinai had decided not to administer Aduhelm.
Apria lowered to neutral despite recent underperformance of shares
- Meanwhile, citing uncertainty over Phillips’ product recall and near-term downside risks to sales and EBITDA, Goldman Sachs has downgraded Apria (NASDAQ:APR), a healthcare provider focused on home respiratory therapies.
- The analysts point out that the recent underperformance of Apria shares reflects their concerns, but from this point they fail to see any significant upside in shares. The 12-month price target lowered to $29.00 from $32.00 per share implies a premium of only ~4.9%.
- In June, Koninklijke Philips recalled millions of sleep apnea and ventilator machines citing potential health risks.
With approval in adults, Merck’s pneumonia vaccine to take lead in children: Cantor
- On Friday, Merck (NYSE:MRK) announced the FDA approval for a new version of Pneumococcal vaccine that offers protection against 15 strains of Streptococcus pneumoniae.
- Noting that the FDA decision cover only the adult demographic, Cantor Fitzgerald highlights the potential of the vaccine to take lead in children and infants as those indications are yet to come.
- Cantor has an overweight rating on Merck with the price target of $107.00 per share implying a premium of ~37.1%.
- The analyst Louise Chen points to an estimated ~$7B global market for pneumococcal conjugate vaccines (PCV) which was at a growth trajectory in 2020.
- Chen also highlights the potential tailwinds from a recent proposal by a CDC expert panel to lower the age group for PCV vaccination to 50 from 65 years. According to the analyst, Merck’s VAXNEUVANCE will compete against Pfizer’s Prevnar 20 which was granted the FDA approval only last month.
Doximity initiations indicate bullish prospects
- Many Wall Street analysts have started the coverage on Doximity (NYSE:DOCS) with buy-equivalent ratings.
- Citing the competitive advantage of the company with its difficult-to-replicate network of physicians, Raymond James has begun the coverage of the stock with an outperform rating.
- Amid increasing importance of digital channels during the pandemic, Doximity which according to the analysts led by Brian Peterson is “consistently showing impressive ROI metrics” could deliver above average growth over the next 5–10-year period, the firm noted.
- The price target of $60.00 per share implies a premium of ~10.4%. Meanwhile, SVB Leerink and William Blair have both opened their coverage with outperform ratings on Doximity.
- However, Goldman Sachs has initiated with a neutral rating with the price target of $36.00 per share indicating a downside of ~33.8%.
- When Doximity made its public debut last month valuing the firm at approximately $9B, the shares more than doubled from its $26-a-share IPO price.
Analyst views are mixed on Bright Health
- The Wall Street appear to be divided on its views on Bright Health Group (NYSE:BHG) as the company ends its IPO quiet period on Monday, The health insurer has garnered four buy-equivalent ratings and an equal number of hold ratings according to Bloomberg data as of 7.00AM EST.
- With a buy rating on the stock, Goldman Sachs thinks that the company is well positioned to generate above peer/average growth in the coming years. The firm’s Street high target of $36.00 per share implies a premium of ~161.8%.
- “While we think competitive dynamics in the individual market pose some risks, and acknowledge the company’s somewhat limited track record, we do not think multiples fully give credit for the company’s robust growth trajectory, with a number of avenues for sustaining that growth longer term,” the analyst Terence Flynn wrote.
- Meanwhile, Citi has started the coverage with a neutral rating and the per share target of $16.00 implies a premium of ~16.4%.
- Despite the optimism over the long-term prospects, the analysts led by Ralph Giacobbe take a more reserved near-term view on Bright Health citing the risks over its ability to manage costs for what they see as a “significantly higher revenue base” while the company remains unprofitable.
- In its trading debut last month, Bright Health fell below its IPO price while Seeking Alpha contributor Donovan Jones remained bullish on the stock citing its “growth prospects in the transition to value-based healthcare.”
All share price moves are calculated based on the market close unless otherwise stated.