September 13, 2016
By Alex Keown, BioSpace.com Breaking News Staff
CHICAGO – Investing in a company during a tight political race could be tricky, but analysts at The Street have picked two biotech stocks that should do well, no matter which candidate ends up in The White House next year.
Shares of McKesson Coporation are down this morning, but analysts at The Street think the quality of this company is strong enough to show long-term positive returns regardless of the political landscape. That doesn’t mean the stock is immune to temporary hits from politics. The Street notes that shares of McKesson have taken a hit due to the debate over drug pricing. However, Greg Nathan, portfolio manager for the FPA U.S. Value Fund, told The Street that “McKesson has recession resistant growth which is two to three times GDP growth and it trades at a 20 percent discount to the market.”
McKesson, which provides medications to drugstore chains like CVS and Target, employs about 70,400 full-time employees. In February, the company snapped up up Vantage Oncology, LLC, a national provider of radiation oncology, medical oncology and integrated cancer care. At the same time, McKesson acquired Biologics, Inc., an oncology pharmacy services company. The acquisitions came at a cost of about $1.2 billion, the company said. In March, McKesson struck a $3 billion deal to acquire Rexall Health, a drugstore chain, to strengthen McKesson’s position in Canada’s pharmaceutical supply chain, the company said. Earlier this year McKesson also signed a generic drug sourcing agreement with Wal-Mart that includes an expanded long-term distribution agreement.
Shares of McKesson are slightly down this morning, trading at $175.96 as of 11:09 a.m.
Nathan is also bullish on Valley Forge, Penn.-based AmerisourceBergen , which serves as a pharmaceutical sourcing and distribution services company for the healthcare industry. Although shares of the stock are down this year, Nathan believes its growth through acquisition will keep it a strong earner for investors. Nathan cited two acquisitions from 2015, including its deals with veterinary drug retailer MWI Veterinary Supply for $2.58 billion and compound drug supplier PharMEDium for $2.58 billion. Last year, analysts were also high on AmerisourceBergen, calling it the “pony to ride” for biosimilar opportunities in coming years.
The company reported a revenue increase of 7.7 percent to $36.9 billion for the third quarter in August. In May, the company announced a three year extension of its distribution relationship with Walgreen’s Boots Alliance. The company also has a distribution agreement with Publix, which was announced in February.
Shares of AmerisourceBergen are trading at $85.46 this morning. This time last year the stock was trading at $106.78 per share.
