Stocks are rolling along unchallenged, surging to highs not seen since 2007. Investors are partying like it's before the recession, but with many top stocks knocking down new 52-week highs, how's an investor supposed to find a dip worth buying in this rally?
Health care stocks are the right place for you: While some picks in the sector are recording healthy starts to 2013, others have seen their shares cut down and languishing in the red since the new year kicked off. Here are five health care stocks that haven't flourished so far this year, and whether you should look to pick up these laggards.
Battling for anemic growth
Anemia drug maker Affymax (AFFY) sure hasn't roared out of the gate this year. The stock surged in 2012, but since Jan. 1, shares of Affymax have plummeted more than 16%. Fortunately, there's no need to panic.
The company's once-monthly anemia-fighting injection for dialysis patients, Omontys, is still finding its legs after receiving FDA approval early last year. Affymax's marketing partner for Omontys, Takeda Pharmaceuticals, did report sales of Omontys in the nine-month period ending on Dec. 31, falling below Wall Street expectations that helped push the stock lower. However, with the drug's launch coming in stages and competitor Amgen still dominating the dialysis-related anemia market with Epogen, Omontys' slow start shouldn't cause concern.
Omontys and Epogen matched up roughly equally in head-to-head trials in terms of safety and efficacy, but Amgen's product requires far more doses than Omontys' simple once-monthly level. If Affymax can get in the door with more dialysis centers, a move that could take quite some time, the company -- and stock -- will be poised to rebound.
Approval in hand and ready to roll
Small biotech NPS Pharmaceuticals (NASDAQ: NPSP) hasn't suffered as big a drop as Affymax to kick off the year, but with shares down nearly 7% since 2013 began, it's safe to say that shareholders aren't celebrating.
NPS's future has just begun with the FDA's recent approval of Gattex, the company's first-approved, orphan drug-designated therapy to treat short bowel syndrome. The company expects peak sales of $350 million for the drug, so it's no slouch -- but it'll take time for NPS to build up to that level. In the meantime, expect a slow but steady start for the company's flagship drug.
NPS does have pipeline power, too, however. There's an expected filing for regulatory approval for its hypoparathyroidism drug Natpara, another orphan drug therapy that could hit sales of $250 million one day if it passes the FDA. Considering that Gattex could potentially win regulatory approval for treating more indications than just short bowel syndrome -- especially if the intestinal-healing medication can find approval for far more common diseases such as Crohn's disease -- NPS has plenty of punch in its future. It's worth a look for your portfolio.
OraSure isn't so sure
Forget about the start of the year; here's a stock that's been shredded just over the past week.
OraSure (OSUR -4.36%) has lost more than 19% year-to-date after investors panicked and fled following the company's earnings report. The oral fluid diagnostics maker did beat expectations on revenue and lost less money than expected; however, its expectations for next quarter, with revenue and losses failing to match up with projections, soured Wall Street's outlook.
The company's been on the downswing ever since the FDA approved its landmark in-home HIV test last year. Questions surrounding the test's accuracy in the hands of ordinary consumers have flared up, and this past earnings report is the second straight that has sent shares into a tailspin. OraSure's product is revolutionary, but it's questionable what kind of market the at-home HIV test appeals to. Expect more ups and downs in the road ahead; right now, OraSure's future is still cloudy.
Idenix's waxing and waning hepatitis-C fortunes
Idenix Pharmaceuticals (NASDAQ: IDIX) hasn't lost as much as some of these stocks year-to-date, but with shares down 7% in 2013, it's caused investors to fret.
The company's had an up-and-down start to the year. On one hand, shares surged in January after the company announced a collaboration with Johnson & Johnson's Janssen subsidiary in a move to develop hepatitis C virus combination therapies. Considering Idenix has been lagging behind in the hep-C space, this was a great move by the company.
Then the bad news hit as Idenix cut development on two other hep-C therapies in February, IDX184 and IDX19368. The FDA had placed the drugs on clinical hold, but it's still a bitter pill for investors to swallow. If Idenix wants to get back into the thick of the hep-C market, it'll have to hope for is partnership with Janssen to work out. Otherwise, it could be a long year for the stock and investors.
Surgical robotics blues
Finally, we get to one of the most exciting -- and frustrating -- stocks in the medical device world, MAKO Surgical (MAKO.DL). Investors are still waiting for this stock's boom, but it hasn't happened in 2013: Shares have fallen more than 12% year-to-date.
The company's slow sales over the past year are to blame. While MAKO managed sales of 45 of its RIO robotic surgical systems in 2012 -- right in the middle of company projections -- that was a decline from the 48 it sold in 2011. MAKO's been slowly pushing toward profitability, but it's been a long road so far.
Nonetheless, MAKO's building up the infrastructure it needs to succeed. With procedural growth still going strong and more than 150 RIO bases commercially installed around the world, this company's on the upswing – even if it's taking longer than Wall Street wanted.
Buying on the dip
Just because a stock's dipping doesn't make it a good buy, but for some stocks, buying in on the downswing can be a profitable idea. NPS looks to be on the best footing of these five, with Gattex now rolling out and the company growing for the future. While OraSure and Idenix face challenges, MAKO and Affymax offer two slow-but-steady growth companies that have the potential to turn around their sliding stocks.
