You’ve heard the phrase, “be greedy when others are fearful.” Judging by the plunge in stocks this month, I think it’s safe to say investors are spooked.
Market sell-offs like we’ve seen in the last few weeks tend to create opportunities, and there are two good opportunities in the healthcare sector that investors can now snap up for bargain prices.
Here’s what you need to know about these two stocks.
AbbVie (NYSE: ABBV)
AbbVie (NYSE: ABBV) is a big pharma company and it’s on sale right now.
The stock trades at just 9.5 times expected earnings, offers a dividend yield over 4.5%, and owns one of the world’s best selling drugs, Humira.
ABBV has been beaten up so far this year on fears of how the Trump administration’s planned efforts to reduce drug prices will impact Humira, and is down almost 17% so far this year and is down 8% just this week.
The company believes these fears are overblown, with AbbVie’s CEO saying in July that “there were probably more positives than there were negatives” for the company when it comes to the Trump administration’s proposed drug price cuts.
But AbbVie isn’t just Humira. The company’s cancer drug imbruvica, and its hepatitis C treatment, mavyret, are both seeing phenomenal sales. AbbVie also is gearing up to release a new cancer drug, venclexta, and a new endometriosis drug, orilissa, and has two promising drug candidates in its pipeline with its two immunology candidates, risankizumab and upadacitinib.
The average price target for ABBV is $104.21, suggesting possible upside of 29%. But early this week, SunTrust Banks rated the stock a Buy and set a price target of $135 – 67% higher than Friday’s closing price.
Celgene (NASDAQ: CELG)
The stock is rare among biotechs in that it doesn’t trade at a frothy valuation. In fact, it’s dirt cheap trading at around 7.5 times expected earnings. And right now, you can snatch it up on sale as it’s down just over 30% so far this year, and is down 19% just over the last month.
The market has concerns about the biotech’s revenue being too dependent on just one drug, Revlimid, a treatment that could face generic competition in the early 2020s. But I think those fears are overblown. Especially when you consider Celgene’s pipeline.
Celgene could have several new blockbuster drugs on the market soon, including its multiple sclerosis (MS) treatment, ozanimod, its luspatercept treatment for myelodysplastic syndromes (MDS) and beta-thalassemia, and its liso-cel CAR-T oncology treatment.
And with the promise of those new drugs on the horizon, it’s expected that revenues and earnings will grow by double digits both this year and in 2019.
With this in mind, analysts’ average twelve-month price target for CELG is $118.96, indicating potential upside of 64.19%. Mizuho recently rated the stock a Buy and set a price target of $129, or 78% higher than the current price.