Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



AstraZeneca PLC, Gilead Sciences and Galena Biopharma Could Be Today's Biggest Movers in Healthcare

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

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.

Good morning, fellow Foolish investors! Let's check in on the top stories in health care this morning.

AstraZeneca falling on hard times
Shares of Astrazeneca PLC (NYSE: AZN  ) are down 3.59% in premarket this morning after the company reported an eye-popping 28% drop in earnings last quarter compared to a year ago. Pre-tax profit also fell 57% to $3.3 billion for the year. 

As a refresher, AstraZeneca's revenues have been falling for a while now as they've lost patent protection for key drugs in their commercial portfolio. So, this isn't a new or unexpected turn of events.

What is new is the company's worse than expected guidance for 2014 and beyond. Revenues are expected to drop by double-digits percentage-wise, as additional drugs like Crestor and Nexium come off of patent protection. In short, revenues aren't expected return to 2013 levels until at least 2017. 

If there was a silver lining in today's earnings release, it was AstraZeneca's decision to keep paying a dividend of $1.90. However, the company will not restart its 2012 share buyback program, choosing instead to focus on putting cash to work in its clinical pipeline. 

And that's where AstraZeneca is seeking redemption. AstraZeneca has 11 new late-stage clinical candidates compared to a year ago, and another 19 experimental drugs that could enter late-stage trials soon. So, their pipeline does hold promise for turning things around.

That said, investors might want to pass on AstraZeneca for now. There are several other large pharmas and biotechs that offer smoother sailing for the time being.  

Gilead on the rebound?
And one of those large biotechs could be Gilead Sciences. Shares of the giant biotech tumbled yesterday by nearly 5% after the company decided not to give yearly guidance for its new hepatitis C drug Sovaldi during its earnings release last Tuesday.

Despite beating analysts' earnings per share estimates by 5%, the market clearly wanted to know if Sovaldi is the world beater it's being billed as by many experts on Wall Street. With the benefit of a day to digest the lack of guidance, the market is warming up to Gilead again, with shares rebounding over 1% in premarket this morning.

What's key to understand is that even without Sovaldi sales, Gilead shares are still only trading at about 10 times annual revenues. Put simply, Sovaldi's sales should help to boost share price over the long run, even if AbbVie's competing hep C drug is approved later this year. Investors with a long-term outlook may want to keep tabs on Gilead going forward.

Insiders keep selling at Galena
Turning our attention to small-caps, shares of Galena Biopharma (NASDAQ: GALE  ) may be in for another down day after word hit the Street late yesterday that Director Stephen S Galliker cashed in $1.25 million worth of options this week. Specifically, Mr. Galliker sold 300,000 shares at an average price of $4.17.

Normally a Director selling options as part of his or her overall compensation package wouldn't be newsworthy. The issue at hand is that Galena's insiders have completed over a dozen insider sells over the past two months; some of which have been particularly large, such as CEO Mark Ahn's $3.8 million sell last January. So, Mr. Galliker's latest sale is starting to foment concern among investors. 

What's my take? I think there are two ways to look at these insider sales. One view is that insiders are simply taking advantage of the stock's 200% plus rise to put some money in the bank. That's fairly normal and nothing to worry about.

Another view is that insiders are selling stock before their fourth quarter earnings release, when investors will get a better feel for how Abstral is selling. There is some concern that Abstral revenues will be weaker than expected, and the interim analysis for the company's lead clinical candidate, NeuVax, could be delayed until next year. It's hard to say which view is correct at present, so we'll have to wait and see.  . 

Find out what The Motley Fool's top stock for 2014 is
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 12, 2014, at 11:17 AM, wildeweasel wrote:

    GALE has been caught in a pump and dump scheme that ended this month, coincidentally while insiders are dumping shares, earning could make things even worse. This looks really bad.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2826150, ~/Articles/ArticleHandler.aspx, 8/31/2015 2:47:30 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

George Budwell

George Budwell has been writing about healthcare and biotechnology companies at the Motley Fool since 2013. His primary interests are novel small molecule drugs, next generation vaccines, and cell therapies.

Today's Market

updated 2 days ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:05 PM
AZN $31.67 Up +0.06 +0.19%
AstraZeneca plc (A… CAPS Rating: ****
GALE $1.50 Up +0.01 +0.67%
Galena Biopharma,… CAPS Rating: *