It was a good week for health care -- so good that around a dozen stocks saw double-digit gains. Here are three of the biggest winners for the week.
Anticipation elevation
MLV and Company initiated coverage on Geron Corporation (GERN 3.77%) this week. The investment firm's "buy" recommendation helped spark shares to jump a whopping 39%.
The big driver behind interest in Geron appears to be centered on upcoming results from an investigator-sponsored study conducted by the Mayo Clinic. This phase 2 study focuses on use of Geron's imetelstat as a potential treatment for myelofibrosis. Initial results are expected to be announced at the American Society of Hematology, or AHS, meeting scheduled for December.
Assuming those results are positive, Geron appears likely to quickly move forward with its own mid-stage myelofibrosis study. The company hopes to show that imetelstat can achieve disease modification with its approach of inhibiting the telomerase enzyme.
Bracing for success
Preliminary third-quarter results sent shares of orthodontic medical device maker Align Technology (ALGN 0.12%) soaring by nearly 34% this week. Align blew past expectations on both the top and bottom lines.
The key to Align's success is its Invisalign clear aligner. A terrific summer season for the teenage market helped drive revenue up 20.5% year-over-year. Earnings jumped to $34.5 million from a loss of $0.3 million in the third quarter of last year.
Align projects strong results for the fourth quarter as well. The company provided guidance of net revenues in the range of $169.1 million to $173.1 million and earnings per diluted share in the range of $0.41 to $0.43. The average analysts' estimate for the next quarter prior to this week's blowout numbers was $0.36 per share.
Miss and score?
Athenahealth (ATHN) missed analysts' expectations for earnings. Did the stock fall as a result? Nope. Instead, shares flew 20% higher for the week. What's going on?
The cloud-based physician software vendor reported adjusted earnings of $0.29 per share while Wall Street expected closer to $0.31 per share. No worries, though. Athenahealth wowed investors with its impressive 25% growth in the number of physicians in its network. And the company stuck by its prior full-year earnings guidance (albeit at the low end of the range).
Because of number gyrations caused by the company's acquisition of Epocrates, athenahealth now sports a price-to-earnings multiple of more than 21,805. That's not a typo. It's not really that highly priced, of course, but after this week's double-digit gains any bump could bring shares down to less stratospheric levels.
Best of the best
Which of this week's humongous stocks could go even higher? I think any or all of them could. If forced to pick just one, though, I'd go with Align Technology.
Geron could be a huge winner over time if imetelstat lives up to expectations. There's still considerable uncertainty in the days ahead, though. I like athenahealth's position in the physician market. My concern, though, is that the stock is now up in the clouds with the company's software.
Align gets the nod because it's already a proven winner with a great product on the market and still has room to grow. The company knocked the ball out of the park in last quarter. I expect that Align will keep up its winning ways.
