Why Intercept Pharmaceuticals, Endocyte, and PharMerica Are Today's 3 Best Stocks

Despite a mixed jobs report the S&P 500 trudges higher, while Intercept Pharmaceuticals, Endocyte, and PharMerica soar by at least 27%!

Jan 10, 2014 at 5:15PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Despite the S&P 500 (SNPINDEX:^GSPC) ending the week on a positive note by finishing slightly higher, today's economic data couldn't have possibly been more confusing.

The primary market mover was the release of the December jobs report from the U.S. Bureau of Labor Statistics. Following the ADP National Employment Report and lower weekly initial jobless claims figure earlier this week, the expectation was for robust nonfarm payroll job growth. What investors got, instead, was an increase of just 74,000 nonfarm jobs in December compared to economists' expectations for the addition of roughly 200,000 jobs.

Ironically, though, because the labor force participation continues to shrink this disappointing gain helped the unemployment rate plummet 0.3% to just 6.7%, its lowest reading in six years.

By the time the market had digested this push-pull jobs report, the S&P 500 had pushed higher by 4.24 point (0.23%) to close at 1,842.37. For a second straight day, however, it was all health care companies leading to the upside.

Leading the pack yet again was Intercept Pharmaceuticals (NASDAQ:ICPT), which many, including myself, had figured would be tuckered out after a 281% romp higher yesterday. Today, Intercept, a clinical-stage developer of chronic liver disease therapies, advanced "just" $170 per share, or 61.6%, after four brokerage firms upped their price targets on the company. Most notably, Bank of America Merrill Lynch boosted its price target from $81 to $872 per share on the heels of strong midstage results from obeticholic acid, or OCA, Intercept's treatment for nonalcoholic steathohepatitis, a liver disease that affects one in eight people in the U.S. Bank of America Merrill Lynch also pegged peak sales of OCA at $4 billion per year. While I certainly can't refute the impressive response in midstage trials of OCA, I'd have to think that certain unrealistic expectations have potentially been baked into Intercept's share price to lift the stock up better than 500% in two days.

Biopharmaceutical company Endocyte (NASDAQ:ECYT), which focuses on developing therapies to treat cancer and other inflammatory diseases, advanced 28.6% following positive commentary from RBC Capital Markets. According to RBC, the risk-versus-reward on Endocyte is positive here, and the research firm believes that Endocyte's pipeline can fuel future growth regardless of how well vintafolide performs in a midstage non-small cell lung cancer study. Endocyte is partnered with Merck (NYSE:MRK) on the project, and vintafolide has demonstrated early efficacy in treating ovarian cancer and NSCLC. However, I suspect Endocyte will need solid results from its NSCLC trial if it has any hope of holding today's big gains.

Finally, pharmaceutical services provider PharMerica (NYSE:PMC) gained 27.1% after issuing its preliminary 2014 guidance and announcing the acquisition of BGS Pharmacy Partners. PharMerica said in a press release it anticipates reporting $1.35-$1.50 in earnings per share and $1.67 billion-$1.72 billion in revenue in 2014. By comparison, Wall Street expected $1.47 in EPS and $1.52 billion in revenue, so it's a clear beat on the top line. PharMerica also outlined its two-step approach to growth over the next two years which involves cost reductions to achieve $50 million in annual savings and a focus on acquisitions that will add at least $100 million to its top-line per purchase. With Obamacare now implemented and PharMerica riding a four-quarter streak of EPS beats, I feel the company could have further upside potential.

If you think these companies are transforming before your eyes, wait till you see what's happening to our health-care system! 
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Fool contributor Sean Williams owns shares of Bank of America, but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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