Over the past year, the healthcare industry has made significant progress in providing analytics-based digital solutions and has played a major role in the battle against an historic public health crisis. The use of big data in healthcare services should drive the industry’s growth in the long run. A significant shift to value-based healthcare is occurring, with an emphasis on smart decision making, mitigating risk and preventative care.
However, given the current focus on production and manufacturing industries to help drive the economy back to pre-pandemic levels, capital investments in the field of healthcare are likely to remain low in the near term.
With that in mind, we think the current price levels of healthcare stocks NovoCure Limited (NVCR), 10x Genomics, Inc. (TXG), GoodRx Holdings, Inc. (GDRX), and Doximity, Inc. (DOCS) look unsustainable, given the companies’ weak growth prospects. Therefore, these stocks are best avoided now.
Click here to checkout our Healthcare Sector Report for 2021
NovoCure Limited (NVCR)
NVCR is an oncology company that develops, manufactures, and commercializes Optune for the treatment of a variety of solid tumors. The company is also developing products for brain metastases, non-small cell lung cancer, pancreatic cancer, gastric cancer, ovarian cancer, liver cancer, and mesothelioma. NVCR is based in Saint Helier, Channel Islands.
On July 1, NVCR reported positive results from its phase 2 pilot HEPANOVA trial in liver cancer testing. However, the results have not yet been approved by regulatory bodies.
In terms of its non-GAAP forward P/E, NVCR is currently trading at 6,998.89x, which is 28,789.1% higher than the 24.23x industry average. Its 279.96 non-GAAP forward PEG multiple is 13,748.8% higher than the 2.02 industry average.
NVCR’s operating loss came in at $88,000 in its fiscal first quarter, ended March 31. Its net loss declined 204.5% from its year-ago value to $4.13 million. The company’s loss per share stood at $0.04.
A $146.97 million consensus revenue estimate for its fiscal third quarter, ending September 2021 indicates a 10.8% improvement from the same period last year. Analysts expect the company’s EPS to come in at $0.02 in the current quarter, indicating a 77.8% decline year-over-year.
NVCR share price has slumped 12.9% over the past month. The stock lost 2% intraday to close yesterday’s trading session at $184.68.
NVCR has a D grade for Sentiment and Value in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree. Among the 223 stocks in the F-rated Medical – Pharmaceuticals industry, NVCR is ranked #73.
Beyond what we’ve stated above, we have also rated NVCR for Growth, Quality, Momentum, and Stability. Click here to view all NVCR ratings.
10x Genomics, Inc. (TXG)
TXG, which is based in Pleasanton, Calif., is a life science technology company that develops and sells instruments, consumables, and software for analyzing biological systems. The company’s products consist of chromium and chromium connect instruments, microfluidic chips, slides, reagents, and other consumables products.
TXG’s 38.99 forward EV/Sales multiple is 477.4% higher than the 6.75 industry average. In terms of forward Price/Cash Flow, TXG is currently trading at 122.41x, which is 553.4% higher than the 18.73x industry average.
TXG’s loss from operations declined 48.6% year-over-year to $10.22 million in its fiscal first quarter, ended March 31. Its net loss stood at $11.55 million, down 45.4% from the same period last year. Its loss per share declined 50% from its year-ago value to $0.11.
A $129.19 million consensus revenue estimate for its fiscal third quarter (ending September 2021) indicates a 79.9% increase year-over-year. However, the Street expects the company’s EPS to remain negative at least until next year.
TXG share price slumped 6.8% intraday to close yesterday’s trading session at $169.00. The stock has lost 6.3% over the last month.
TXG has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. TXG also has a D grade for Value, Stability, and Quality. It is ranked #67 among the 80 stocks in the Medical – Services industry.
Click here to view additional TXG ratings for Momentum, Growth, and Sentiment.
GoodRx Holdings, Inc. (GDRX)
GDRX provides easy access to price transparency and affordability solutions for medications, convenient telehealth consultations, and additional healthcare services and resources. The Santa Monica, Calif.-based company also provides the GoodRx platform, which aggregates and analyzes pricing data from a variety of sources.
On June 28, Lifshitz Law Firm, P.C. filed a class action lawsuit against GDRX alleging false and/or misleading statements by the company at the time of the IPO in September last year.
And, as of May 6, Robbins LLP was investigating GDRX officers on the grounds of alleged violation of the Securities Exchange Act of 1934 and breached fiduciary duties.
In terms of forward P/E, GDRX is currently trading at 453.33x, which 1,305.9% higher than the industry 32.24x average Its 50.95 forward EV/EBITDA ratio is 218.7% higher than the 15.99 industry average.
GDRX’s net income declined 93.9% year-over-year to $1.67 million in its fiscal first quarter, ended March 31. Its operating income slumped 111.4% from its year-ago value to a negative $5.00 million. The company’s EPS declined 100% year-over-year to zero. .
Analysts expect GDRX’s revenues to increase 38.9% year-over-year to $195.15 million in the current quarter, ending September 2021. The company’s EPS is expected to remain flat at $0.09 versus the same period last year. Shares of GDRX have lost 27.8% over the past six months, and 22.5% year-to-date.
It is no surprise that GDRX has an overall rating of D, which equates to Sell in our proprietary POWR Ratings system. The stock also has a D grade for Growth, Value, Stability, and Sentiment. It is ranked #145 in the Medical – Pharmaceuticals industry.
To see additional GDRX ratings for Quality and Momentum, click here.
Doximity, Inc. (DOCS)
DOCS operates a cloud-based digital platform for medical professionals. The company’s cloud-based platform provides its members with tools built for medical professionals, enabling them to collaborate with their colleagues, coordinate patient care and stay up to date. DOCS is based in San Francisco.
DOCS made its stock market debut on June 24. The stock was priced at $26 pre-IPO, above its $20-$23 targeted range. However, DOCS gained 103.8% from its pre-IPO price on the first trading session, to close the trading session at $53.
DOC’s net income increased 68.8% year-over-year to $50.21 million in its fiscal year ended March 31. Its total operating expenses grew 54.3% from its year-ago value to $122.40 million. The company’s EPS improved 76.9% year-over-year to $0.23.
DOCS’s 162.27 trailing-12-month EV/EBITDA multiple is 660.1% higher than the 21.35 industry average. In terms of trailing-12-month P/E, DOCS is currently trading at 223.29x, which is 495% higher than the 37.53x industry average. Shares of DOCS have gained 7.3% over the past five days.
It’s no surprise that DOCS has a grade of D for Value and Stability. It is ranked #47 in the Medical – Services industry. To see additional POWR Ratings for Growth, Sentiment, Momentum, and Quality, click here.
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NVCR shares were trading at $182.25 per share on Thursday afternoon, down $2.43 (-1.32%). Year-to-date, NVCR has gained 5.32%, versus a 17.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...
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