Watch these Stocks at JPMorgan's Annual Healthcare Conference
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JPMorgan is hosting its 31st Annual Healthcare Conference from Monday, January 7 through Thursday, January 10 in San Francisco, CA. The event is widely recognized as the most significant health care investing event of the year.
More than 400 companies are scheduled to present at the four-day conference in 2013, including public and private. Not-for-profit companies such as NYU Hospitals Center and Yale-New Haven Health also participate with their own 30 minute presentations. The conference, which is by invitation only, attracts thousands of healthcare professionals and scientists outside of the investment world. A keynote feature from JPMorgan CEO Jamie Dimon also serves as an annual highlight.
In short, it’s likely at least one company in your portfolio is presenting if you are invested within biotechnology, healthcare IT, life sciences, medical technology, or pharmaceuticals. It would be impossible for me to highlight each public company at the conference, but readers can reference the external website I’ve provided at the end of the article.
Here are three of my favorite investment ideas for 2013 in anticipation of this week’s JPMorgan conference. Each company which receives mention is presenting.
Baxter International (NYSE: BAX) — Tuesday, January 8 at 3:00 p.m. Pacific Time
This $38 billion healthcare operator is one of the most diversified companies presenting at this week’s conference. Baxter International has market-leading divisions within biotechnology, medical devices, and specialty pharmaceuticals. Shares of BAX have risen more than 38% in the past 12 months, and the stability in Baxter International’s underlying business is reflected in a beta of only 0.50.
Despite the large run in Baxter shares, the company trades at a reasonable 16.5x price-to-earnings compared to an industry average of 23x within the medical equipment industry. Baxter is even more attractive on a price/earnings to growth basis with a 1.87x ratio compared to an industry average of 3.5x.
Baxter International has plenty of catalysts in 2013 which should provide further upside. The company announced its acquisition of Swedish-based Gambro for $4.0 billion USD in early December. Gambro, a kidney and liver dialysis product company, enhances Baxter’s renal therapy portfolio. In consideration of the Gambro acquisition, management remains committed to paying out 40% of earnings through a $0.45 quarterly dividend, which has increased approximately 12% annually over the last three years.
Baxter also has a cash cow in the form of Advate, a targeted therapy for hemophilia A, which affects approximately 1 in 5,000 males. Investors believe Advate sales can continue higher, after the FDA approved a higher dosage strength of the drug this past July. The higher dose allows patients to be treated only once every three days, which is a first in the hemophilia market and gives Baxter International a sustainable advantage.
Looking to the future for another blockbuster drug, Baxter has multiple data releases on Alzheimers disease this year. Analysts at RBC Capital believe there is a 50% probability that Baxter receives FDA approval for its drug Gammagard Liquid in mild/moderate Alzheimers in coming years, based on their conversations with neurologists.
Chief Financial Officer Robert Hombach is presenting at this week’s conference.
Celgene Corporation (NASDAQ: CELG) — Monday, January 7 at 8:00 a.m. Pacific Time
Celgene formally kicked off proceedings with its conference being held first on Monday at 8:00 a.m. PT. Chief Executive Robert Hugin is presenting. Shares of CELG have risen approximately 5 percent since I published Revlimid Ramp-Up, New Drug Launches Make Celgene a Buy on Nov. 28. Revlimid is the company’s leading blood cancer drug and sales continue to grow in new and expanded indications.
In December, an international Celgene subsidiary based in Switzerland announced positive phase III data from its study on pomalidomide plus low-dose dexamethasone in patients with refractory multiple myeloma. The December release supports the earlier observations in October that patients received overall survival advantages from pomalidomide. Analysts estimate the drug could reach $600 million in sales during 2015, assuming a positive vote at the FDA advisory committee meeting this February.
2013 Turnaround Stories in Medical Devices
Two of 2013’s possible turnaround stories are presenting at this week’s conference, in the form of medical device makers Boston Scientific (NYSE: BSX) and St. Jude Medical (NYSE: STJ).
Boston Scientific has seen its stock price fall from an all-time of of nearly $45 in 2004, and shares currently exchange hands in the mid-single digits. The company has suffered market share losses within its major cardiology business to the likes of St. Jude Medical and Medtronic (NYSE: MDT). In recent weeks, shares of competitor St. Jude have fallen more than 15 percent over concerns that its Durata defibrillation lead may be taken off the market. Doctors have found that St. Jude’s cables, which are used to connect a defibrillator to the heart, can fray when coming into contact with another object.
Analysts feel that Boston Scientific will benefit more than Medtronic from St. Jude’s potential losses. Shares of BSX could move back toward double digits as Boston Scientific sees stabilization within its cardiac rhythm management (CRM) business and drug-eluting stent clinical program.
Aside from the ensuing battle in cardiology, Medtronic has a solid pipeline in emerging treatment areas such as atrial fibrillation, transcatheter heart valves, and drug-resistant hypertension. CEO Omar Ishrak, who joined Medtronic in June 2011, is speaking at this week’s J.P. Morgan conference. Ishrak comes to Medtronic with experience dealing with the Chinese market, a large area of potential growth for the company. Medtronic was one of the earliest medical device companies to enter the Asian market. While it will take multiple years for growth in Medtronic’s pipeline and emerging markets to materialize, investors receive nearly a 2.5% yield while they wait.
Medtronic Chairman & CEO Omar Ishrak presented today at 9:30 a.m. Pacific Time. Boston Scientific CEO Mike Mahoney is speaking on Tuesday, January 8 at 9:00 a.m. PT. St. Jude Medical Chairman, President & CEO Dan Starks is speaking on Wednesday, January 9 at 3:30 p.m. PT.
Readers interested in learning more about JPMorgan’s Annual Healthcare Conference can visit the following Webcasts link (registration required). A detailed calendar of events is also available. If you are active on Twitter, the hashtag #JPM13 will be trending this week.
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johnmacris has no position in any stocks mentioned. The Motley Fool owns shares of Medtronic, Inc. and St. Jude Medical, Inc.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!