Author: Raj Gupta

Raj Gupta is Director, Research Analyst. After joining the firm in 2002 as a research analyst, Raj was appointed senior equity analyst in 2006, and lead senior equity analyst in 2014—largely because of his ability to select outperforming stocks. He acts as an expert in the O’Neil Methodology and contributes to the direction of product and service line development. He recommends securities for addition to or removal from the U.S. Focus List, or USFL, and the associated alerts to clients. During his tenure, he was part of the leadership that developed the Global Focus List, which marked the firm’s successful expansion into international equity recommendations. He is also a lead on the IPO Rewind report and contributes to weekly summaries on the performance of the U.S. market. Much of his expertise is delivered as highly customized service to clients. RAj earned his Bachelor’s degree in Economics from the University of California, Santa Barbara. He began working at the firm directly out of college, driven by his passion for investing and stocks. An avid soccer player, he built and managed an adult league in the Los Angeles area, in which he still plays. He also enjoys international travel; he and his wife commit to at least one major adventure a year.

Global Health Care Sector: Biotech/Pharma

Posted on by Raj Gupta

Key Points:

 

U.S.

  • The iShares Nasdaq Biotech ETF ( IBB ) and the iShares U.S. Pharmaceuticals ETF ( IHE ) are both now testing YTD highs after coming under accumulation over the last month. The majority of top holdings within each ETF have reported beat-and-raise quarters and are now rallying off the lows, with a handful breaking out into new highs ( LLY, PFE ). Though the fundamental backdrop is positive, uncertainty regarding healthcare policy and drug pricing continues to be an overhang on the industry. We recommend a selective approach, focusing on technically intact, profitable biotech and pharmaceutical companies driven by underpenetrated and superior FDA-approved drugs.
  • Our U.S. Focus biotech/pharma ideas all have multiple patent-protected FDA-ap­proved drugs and are expected to grow sales and EPS by double digits over the next two years. U.S. Focus List ideas include Vertex Pharma, Zoetis, and Supernus Pharma. U.S. Stocks of Interest include Horizon Pharma, Pacira Pharma, and Jazz Pharma. VRTX and ZTS are actionable at current levels, while SUPN, our third U.S. Focus List idea, has come under recent selling pressure post Q2 results. Though its fundamental profile remains intact, the stock will need to improve technically in the coming weeks to stay on our U.S. Focus List.

EMEA

  • The European biopharmaceutical market was estimated at $44B in 2017 and is expected to reach $68B by 2023, having a CAGR of 9%. The efficacy and safety of new drugs, specifically for complex and chronic diseases, are driving market growth. Currently, 70–80% of healthcare costs in the EU are spent on chronic diseases. Similar to the U.S., we recommend a selective approach, focusing on the few ideas that are outperforming on a relative basis due to superior EMA approved drugs marketed in underpenetrated regions of Europe.
  • Our European Focus List ideas include Ipsen IPN.FR, Swedish Orphan Biovitrum SOBI.SE, and Vifor Pharma VIFN.CH.

APAC

  • Despite a favorable fundamental backdrop, our Hong Kong-listed Focus List stocks have pulled back to long-term support levels due to a weakening gener­al market. Last week, China’s currency reported eight straight weeks of losses and reached its lowest level in more than a decade. Therefore, we recommend waiting for market conditions to improve before buying Hong Kong-listed Focus List ideas. The APAC biologics market is expected to have a CAGR of 15.6% during 2016–2024, driven by favorable regulations for approval.
  • Our APAC Focus List ideas include CSPC Pharmaceutical Group CPHA.HK, Wuxi Biologics WXBO.HK, 3Sbio SBIL.HK, and Ipca Laboratories LAB.IN. APAC Stocks of Interest include Sun Pharma TIC.IN and Torrent Pharma TRR.IN.

Avenue Supermarts

Posted on by Raj Gupta

Key points from the report:

The stock had a gap-up opening today after the Company released better-than-expected Q1 FY 2019 results.

RS Rating 92. A/D Rating A+.

EPS Rank 96. Composite Rating 99. SMR Rating A.

Home Depot

Posted on by Raj Gupta

Key points:

The stock has broken out of a 24-week cup-with-handle base.

The stock has a high EPS Rank of 91, aided by FY 2015–2018 EPS CAGR of 17%. Earnings stability factor is the best, at 1, indicating the Company’s consistent performance.

During this period, pretax margin improved from 12% to 14%.

RS Rating of 84, A/D Rating of C+.

Ipca Laboratories

Posted on by Raj Gupta

Key points:

The stock is constructively building the right side of a 10-week flat base. We recommend buying shares here in anticipation of the stock clearing above resistance at ~INR 760.

Technical ratings: RS line is at a new high, RS Rating 90, and A/D Rating A-.

Fundamental ratings: EPS Rank 63, SMR Rating C, and Composite Rating 90.