3 Humongous Health-Care Stocks This Week
Dec 7th 2012 8:49PM
Updated Dec 7th 2012 9:40PM
Despite plenty of big losers in health care this week, the sector also saw its fair share of winners. Here are three of the most humongous health-care stocks of the week.
Low to High
Just one week after making our list of horrendous health-care stocks, Hi-Tech Pharmacal bounced back in a big way, by climbing 18% for the week. And the company did it the old-fashioned way. It earned it.
Hi-Tech reported surprisingly good quarterly results on Dec. 6. Earnings per share came in at $0.66 per share, blowing away analyst estimates of $0.52 per share. Although the numbers were better than expected, they also fell short of last year's figures. Hi-Tech partially attributed its year-on-year earnings decline of 35% to Hurricane Sandy.
This week's action more than made up for Hi-Tech's 11% drop last week. The dip stemmed from an analyst downgrade and a short-seller's report predicting a poor earnings release. That prediction, of course, fell short of hitting the mark.
In the clouds
Cloud-based physician software company athenahealth jumped 13% this week. The company's relatively positive outlook for 2013 sparked the rise in shares.
The numbers for 2013 weren't overly rosy. Ranges given for adjusted income and revenue actually were a little lower than analysts expected. However, the company continues to grow revenue around 30% each year. Anything in that ballpark appears to be enough to keep investors happy.
The Massachusetts-based technology firm's stock still has quite a way to go before it regains its September levels, though. Shares began a slow slide in early October that picked up downward momentum considerably after athenahealth reported quarterly results on Oct. 18. Despite rebounding by nearly 28%, the stock needs to climb another 24% to get back to where it was trading a few months ago.
Best but worst
An 8% gain in one week usually wouldn't qualify as a humongous return in the health-care sector, but it's enough for Dendreon to make our list this week. That's not too shabby for a company that my Foolish colleagues David Williamson and Brenton Flynn include as one of the worst of 2012.
Why did Dendreon move up this week? The bump appears to have been the result of a story on Dec. 5 about a new clinical trial involving Provenge, the company's prostate cancer drug. Georgia Health Sciences University kicked off enrollment for a new study that combines Provenge with two other drugs to evaluate the effects of the therapy on patients with prostate cancer.
My guess is that any bit of positive news was enough to drive shares up somewhat. Dendreon fell 77% from its highs in February and has only topped $5 per share a few times over the past four months. Unless a compelling catalyst comes along, I wouldn't be surprised to see the stock continue to fluctuate between $4 and $5 per share.
None of the above
To be honest, I don't really like any of our three stocks on the humongous list as long-term picks. My view of Dendreon lines up with my fellow Fools, David and Brenton: It's one of the worst biotech stocks of the year. I don't see it becoming one of the best. Hi-Tech Pharmacal is okay, but it's not a stock I would rush out to buy.
As for athenahealth, I like its business model and management team. However, the stock trades at a forward P/E multiple of over 58. Sales and earnings continue to grow at a strong clip, but not enough to justify that kind of valuation, in my opinion.
I typically think at least one of the stocks that make our list in this weekly series would be a reasonable choice for investors. This time, though, my selection is none of the above. Now if we only had that alternative with our politicians...
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The article 3 Humongous Health-Care Stocks This Week originally appeared on Fool.com.Keith Speights has no positions in the stocks mentioned above. The Motley Fool owns shares of Dendreon. Motley Fool newsletter services recommend Athenahealth. 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.
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