Despite the industry-moving J.P. Morgan Healthcare Conference being held earlier this month, the Healthcare Select Sector SPDR ETF (NYSEMKT:XLV) has dropped more than 7% this year, including a 1.7% tumble last week. The sell-off took most healthcare stocks lower, however, shares in these three healthcare stocks bucked the trend and traded up. Here's why.
No. 1: AbbVie (NYSE:ABBV): Up 4.1%
After forecasting that sales of its top seller, Humira, would keep growing, shares in AbbVie jumped over 4% last week.
Previously, investors have been nervous about AbbVie's future because the company generates more than 60% its sales from Humira (the drug hauls in about $14 billion per year), and Humira's composition of matter patent expires at the end of this year.
The company's outlook, however, puts some investor worries to rest because AbbVie thinks remaining manufacturing and dosing patents could prevent biosimilars from eating into Humira's market share for a few more years. As a result, management predicts Humira sales will increase to $18 billion in 2020.
If Humira hits that sales target, AbbVie believes its total sales could reach $37 billion that year (up from around $24 billion in 2015), and that prospect makes AbbVie shares far more intriguing than they were before.
No. 2: Intuitive Surgical (NASDAQ:ISRG) -- up 3.8%
At the J.P. Morgan conference, the maker of the Da Vinci surgical system reported that its fourth-quarter sales grew 12% year over year to $677 million, and that those sales resulted in full-year revenue growing 16% to $325 million.
Intuitive Surgical also said the number of surgical procedures conducted using the Da Vinci system increased by 14%, and that procedure growth in 2016 is forecast at between 9% and 12%.
Based on last week's rally, it appears investors think a healthy forecast for procedure growth and benefits tied to a larger installed number of systems bode well for sales of consumables. If so, Intuitive Surgical shares could benefit from a natural profit tailwind that insulates it against market risk.
No. 3: Anthem (NYSE:ANTM) -- up 2.16%
The second largest national health insurer offered insight into its financials at the J.P. Morgan conference that suggest it's doing a better job at managing the profit headwinds associated with Obamacare enrollment that are plaguing competitors, including UnitedHealth Group.
The company will officially report its fourth-quarter financials on January 27, and when it does, management expects to deliver adjusted EPS of $10.16 for 2015 (handsomely ahead of its early 2015 predictions for above $9.70) and importantly, Anthem thinks adjusted EPS will climb to an adjusted $10.80 in 2016.
That's a pretty rosy forecast considering that profit worries at UnitedHealth have its management questioning whether or not it will continue to participate in the Obamacare marketplaces. Regardless, Anthem has a history of under-promising, so its 2016 forecast could end up proving to be a bit light; especially if it can wrestle savings from its ongoing dispute with its pharmacy benefit manager Express Scripts. According to Anthem, Express Scripts may owe it up to $3 billion in drug discounts -- a contention Express Scripts disputes. Nevertheless, a healthy forecast for earnings upside and potential benefits tied to its pending acquisition of Cigna (which could clear antitrust regulators and close this year) has investors increasingly hopeful.