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US Healthcare Year Ahead...Buy ACAD, AGN, ANTM, CELG, CVS, DHR, EW, EVHC, RARE, REGN, WBA
From: Ens, Ananda
To: Rich Kahn
Date: December 15, 2016 at 10:59:39 AM EST
The US team is out with their 2017 Year Ahead this morning (top pick into the new year. ink) running through ALL sub-sectors with each analysts Top Picks — ACAD, AGN, ANTM, CELG, CVS, DHR, EW, EVHC, RARE, REGN, WBA Washington DC Backdrop Given the clean sweep by the GOP & uncertainty around the ACA, key attention is paid by Andy Bressler to a review of the various scenarios that could play out early next year. With a repeal likely to happen well before a replace (essentially via the Budget Reconciliation process in Jan/Feb), Andy notes this is likely to include a repeal of both health insurance exchange subsidies & a phase-down of Medicaid expansion funding (albeit with a two or three year transition period). He also expects a repeal of many of the larger HC related taxes in the ACA, including the HIX ($14.3bn in 2018), Medtech Tax (2.3%), pharma industry tax ($4.1bn in 2018) & Cadillac tax (effective 2020). As for the views by analysts... Biotech (+) — believe sector will outperform largely as pricing risk has diminished (although will remain in pockets) but pipelines/growth remains. Ying’s top picks are CELG & REGN; Tazeen’s top picks are ACAD & RARE. Spec Pharma (-) — headwinds remain w/ Sumant’s top pick AGN given lower risk to reimbursement pressures & an underappreciated pipeline. Leverage & CF remain the key focus for investors. Tools/Animal Health (=) — Derik notes more “headline” than “real” risks from policy which will create opportunities for a group growing MSD, although valuations remain above peers. DHR (US 1 name) top pick, also A, ZTS in Animal Health, BDX in Diagnostics & CTLT in Services. Medtech (=) — Hopkins’ expects a mixed bag in 2017 w/ stocks trading close to 5yr valuation lows; EW top pick given best growth / purest innovation story.