It's one of those unfortunate facts of life, everyone is going to get sick at some time in their lives. It could be something as simple as the common cold or a complex series of symptoms that takes years to diagnose. The upside of all of this is that the medical business is a relatively safe bet when it comes to investments. If you see the benefit of this and want to put some money into a health care related investment, look into an Exchange Traded Fund (ETF) that will give you the opportunity to hold shares in several different companies rather than trying to guess who's going to come up with the next miracle cure.
There are a couple different companies that let you get your feet wet in the medical field. You could invest in medical devices, which covers everything from stethoscopes to complicated surgical tools. iShares Dow Jones US Medical Devices ETF (NYSE: IHI) lets you in on an investment that includes leaders in the field such as Boston Scientific Corporation (NYSE: BSX), Medtronic, Inc. (NYSE: MDT), and Covidien, Ltd. (NYSE: COV). Each of these companies provides medical devices that hospitals simply cannot do without.
IHI looks to achieve results that correspond to the Dow Jones US Select Medical Equipment index and through a computer aided system, rather than by using money managers, they're able to charge only a 0.48% fee to maintain your stock.
Another great way to invest in the healthcare business is to buy shares in the companies who work tirelessly to provide lifesaving drugs. The Exchange Traded Fund SPDR S&P Pharmaceuticals (XPH) lets you in on several of the top pharmaceutical companies in the world by following a passive management strategy that tracks the total return performance of the S&P Pharmaceutical Select Industry index.
Societe General upgraded BASF AG (OTC: BASFY) to Buy from Hold. The firm believes the bad news is out and that BASF has a strong market position.
Pali Capital upgraded Hot Topic (NASDAQ: HOTT) to Buy from Neutral based on the ongoing merchandise catalyst, the opportunity to reclaim the mainstream kid and closing underperforming stores, which create the most favorable conditions in the last 5+ years.
Stanford upgraded L-1 Identity (NYSE: ID) to Buy from Hold on valuation, and the firm sees little risk to the company from the Obama Administration.
Gymboree (NASDAQ: GYMB) and Windstream (WIN) were raised to Overweight from Neutral at JP Morgan.
Doral Financial (NYSE: DRL) was upgraded at B. Riley to Buy from Neutral.
Alumina (NYSE: AWC) was upgraded to Buy from Neutral at UBS.
Analyst downgrades:
Credit Suisse downgraded Targanta (NASDAQ: TARG) to Underperform from Outperform following the FDA Panel's rejection of Oritavancin.
Citigroup downgraded BASF AG (OTC: BASFY) to Sell from Hold and sees no reason to own the stock following the company's profit warning. Shares were also downgraded at WestLB to Hold from Add.
Deutsche Bank downgraded shares of Amedisys (NASDAQ: AMED) to Hold from Buy and lowered its target to $53 from $75 on concerns over the company's deteriorating A/R aging trends.
VeriFone Holdings (NYSE: PAY) and Navios Maritime (NYSE: NMM) were lowered to Neutral from Overweight at JP Morgan.
NTT DoCoMo (NYSE: DCM) was downgraded at Citigroup to Hold from Buy.
Analyst initiations:
Needham expects shares of Cepheid (NASDAQ: CPHD) to be driven by continued market penetration in the hospital acquired infection market, new test introductions, GeneXpert Infinity sales, and molecular diagnostics growth from sales outside of traditional molecular testing areas. Shares were initiated with a Buy rating and $21 target.
Needham also initiated Gen-Probe (NASDAQ: GPRO) with a Hold rating and expects market share gains for the company when PANTHER is approved in 2010/2011.
William Blair believes Harbin Electric (NASDAQ: HRBN) is an "interesting" opportunity for exposure to rapid growth in infrastructure within the People's Republic of China. The firm started shares with a Market Perform rating.
Boston Scientific (NYSE: BSX) was initiated with a Buy rating and $11 target at UBS.
NutriSystem (NASDAQ: NTRI) was initiated with a Neutral rating at Janney Montgomery.
Ener1 (NYSE: HEV) was assumed at JMP Securities with an Outperform rating and $9 target.
Barclays upgraded the Integrated Oil sector to Positive from Neutral citing valuations. Note that Exxon Mobil (NYSE: XOM) was upgraded to Overweight from Equal Weight based on valuation.
After Force Protection (NASDAQ: FRPT) reported that its 1H08 sales increased more than 200%, Stanford thinks that Force Protection could be poised for several new opportunities in 2009 and they believe the company's risk is already priced into the stock; the firm raised Force Protection to Hold from Sell.
Cowen expects eHealth (NASDAQ: EHTH) to benefit from the steady decline in employer-sponsored health insurance offered by small businesses and reduced regulatory risk, among other reasons. The firm upgraded shares to Outperform from Neutral.
Allied Capital (NYSE: ALD) was upgraded to Market Perform from Underperform at BMO Capital.
Caris upgraded Carmike Cinemas (NASDAQ: CKEC) to Above Average from Average.
Today was another relief trading day on word that Congress has reached a tentative approval of a bipartisan $700 billion financial bailout package. It definitely wasn't from the slew of bad economic data this morning. That was just ugly. Despite poor economic data, bond yields rose as the bailout package will end the flight to quality we witnessed lately.
Below are today's unofficial closing bell levels: DJIA 11,022.06 +196.89 +1.82% NASDAQ 2,186.57 +30.89 +1.43% S&P500 1,209.18 +23.31 +1.97% 10YR T-Note 3.862% +0.091% 52-week lows Top Analyst Calls
American International Group (NYSE: AIG) was up most of the day, but ex-Chairman Hank Greenberg filed to sell shares in the open market because of personal liquidity issues. Shares were up 19% but had fallen all the way down to almost 10% at $2.97 on this news. So much for him putting together a hostile rescue package of his own.
Boston Scientific (NYSE: BSX) was up almost 3% at $12.96 right before the close after it received marketing approval from the FDA for its TAXUS Express2 Atom Paclitaxel-Eluting Coronary Stent System this morning. This stock is so far down from prior highs that any good news is welcome.
General Electric Co. (NYSE: GE) managed to gain 4% to $25.60 right before the close despite its earnings warning hitting the stock early today. This was already factored in and should have been anticipated. It is keeping its AAA debt rating, keeping its dividend, and suspending buybacks to preserve liquidity.
Northwest Airlines Corporation (NYSE: NWA) and soon to be parent Delta Air Lines (NYSE: DAL) approved their merger today with something around 98% to 99% of the votes combined in favor of the deal. Unfortunately it had no bearing on the stocks, as Northwest shares were actually down 1% at the close.
Abbott Laboratories (NYSE: ABT) got approval for its new drug-coated stent. The products are used to open clogged arteries, often in the place of by-pass surgery. The field has been dominated by deeply troubled medical device company Boston Scientific (NYSE: BSX). It looks that the weakened company is in for much more pain.
According toThe Wall Street Journal, ABT "received regulatory approval for its Xience V drug-coated stent, which is expected to be the top seller in the roughly $2 billion U.S. market because it appears to be more effective than rival devices." Boston Scientific will sell the new Abbott product, but with 40% of the revenue going to its rival, it is hard to see how that is a good deal.
BSX has been beaten by competition at almost every turn. It took on tremendous debt when it bought medical device company Guidant. It faced trouble when some Guidant products hit quality control issues. Boston Scientific stents came under criticism a year ago, when medical research questioned how effective they were.
BSX traded at almost $45 in 2004. It is now at about $12. With new competition and a bad balance sheet, that is not likely to change much.
Douglas A. McIntyre is an editor at 247wallst.com.
After hitting a one-year high of $16.67 last June, the stock hit a one-year low of $10.76 in January. BSX opened this morning at $13.20. So far today the stock has hit a low of $13.16 and a high of $13.56. As of 12:45, BSX is trading at $13.36, up$ 0.25 (1.9%). The chart for BSX looks bullish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a November bull-put credit spread below the $10 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just six months as long as BSX is above $10 at November expiration. BSX would have to fall by more than 25% before we would start to lose money. Learn more about this type of trade here.
After hitting a one-year low of $49.58 in July, the stock hit a one-year high of $61.09 in January. ABT opened this morning at $53.81. So far today the stock has hit a low of $53.62 and a high of $55.40. As of 1:00, ABT is trading at $55.07, up $2.00 (3.8%). The chart for ABT looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $47.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just 7 weeks as long as ABT is above $47.50 at May expiration. Abbott would have to fall by more than 13% before we would start to lose money. Learn more about this type of trade here.
ABT hasn't been below $49 at all in the past year and has shown support around $51 recently. This trade could be risky if the company's earnings (due out in mid to late May) disappoint, but even if that happens, this position could be protected by the support the stock might find around $50, where it has bottomed out quite a few times in the past two year. Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in ABT or BSX.
Recent data suggests that America's largest industrial companies are piling up cash. The New York Times reports: "According to S.& P., the total cash held by companies in its industrial index exceeded $600 billion in February, up from about $203 billion in 1998."
That is good news if the money does something other than sit in the bank. A number of very large companies like Google (NASDAQ: GOOG) don't need anywhere near the tons of greenbacks in their accounts and they add more every quarter.
The money probably has two potential uses. One is to buy other companies -- as the market falls, there are going to be more deals at lower prices. Of course, many deals don't work. Some of these will fail to find economies of scale and lead to write-offs like the Boston Scientific (NYSE: BSX) buyout of Guidant. Everyone lost as the BSX shares fell apart.
The second option is that companies could just do the simple thing and turn the cash back to shareholders. Everyone wins and it is hard to screw up a big one-time dividend.
Yum Brands (NYSE: YUM) reported essentially flat fourth-quarter earnings of 44 cents per shares, beating analyst expectations by two pennies. Robust sales in its China and international divisions countered rising costs and a sluggish U.S. performance. Yum raised its 2008 earnings forecast, but not enough for investors to be satisfied. YUM shares fell over 2.2% in premarket trading.
Boston Scientific (NYSE: BSX) swung to a $458 million fourth-quarter loss, as the $27 billion acquisition of Guidant Corp. nearly two years ago continued to erode its bottom line and obscure an overall sales gain. Net loss for the October-December period equaled 31 cents per share, down from a profit of $277 million, or 19 cents per share the year before. Sales, though rose 4% to $2.15 billion. Excluding charges, Boston Scientific posted a profit of $355 million, or 24 cents per share.
Two unconfirmed reports: Engadget reports that Apple Inc. (NADSAQ: AAPL) may come up with a 16 GB iPhone soon. Staff at AT&T (NYSE: T) and O2 saw the phone listed in the inventory -- wishful thinking or the natural step up? Meanwhile, MacRumors reports that employees have spotted new MacBook Pros in Best Buy's (NYSE: BBY) inventory tracking system.
MOST NOTEWORTHY: CTC Media, Callidus Software and Seattle Genetics were today's noteworthy initiations:
Merrill initiated CTC Media (NASDAQ: CTCM) with a Buy rating, citing the company's healthy ad growth outlook and substantial barriers to entry.
B. Riley initiated Callidus Software (NASDAQ: CALD) with a Buy rating and $7 target and believes the company's growing On-Demand offering is being overlooked by investors.
Seattle Genetics (NASDAQ: SGEN) was assumed with an Overweight rating at JP Morgan. The firm views the company as an attractive investment opportunity given the company's growing pipeline of differentiated antibody therapies and partnership with Genentech (NYSE: DNA).
OTHER INITIATIONS:
Cowen initiated Boston Scientific (NYSE: BSX) with a Neutral rating and St. Jude Medical (NYSE: STJ) with an Outperform rating.
Lehman initiated UDR Inc (NYSE: UDR) with an Equal Weight rating.
MOST NOTEWORTHY: Biogen Idec, Western Union and Tibco were today's noteworthy upgrades:
Banc of America upgraded shares of Biogen Idec (NASDAQ: BIIB) to Buy from Neutral as they believe the company's three year growth strategy and the approval of Tysabri for the treatment of Crohn's disease will support a higher valuation.
Oppenheimer upgraded Western Union (NYSE: WU) to Outperform from Perform, citing improving operating margins, easing comps, and improvement in Mexico.
Tibco Software (NASDAQ: TIBX) was raised to Buy from Hold at Citigroup. The firm upgraded shares following the acquisition of BEA Systems (NASDAQ: BEAS) to reflect the company's takeout potential and limited downside.
OTHER UPGRADES:
Royal Ahold (OTC: AHONY) was upgraded to Hold from Sell at Deutsche Bank.
Bear upgraded eBay (NASDAQ: EBAY) to Outperform from Peer Perform.
Morgan Stanley raised Boston Scientific (NYSE: BSX) to Overweight from Equal Weight.
MOST NOTEWORTHY: British Airways, ADC Telecomm and Qwest were today's noteworthy upgrades:
Goldman upgraded shares of British Airways (OTC: BAIRY) to Buy from Neutral on valuation, and believes the company is the "jewel in the crown" in European aviation.
Morgan Keegan expects ADC Telecomm (NASDAQ: ADCT) to benefit from carrier upgrade activity and views expectations as conservative. The firm raised shares to Outperform from Market Perform.
Qwest (NYSE: Q) was raised to Buy from Hold at Soleil on valuation and yield support.
OTHER UPGRADES:
VistaCare (NASDAQ: VSTA) was upgraded to Hold from Sell at Deutsche Bank.
East West Bancorp (NASDAQ: EWBC) was initiated with a Buy rating and $36 target at B. Riley; the firm's target implies a 23.1% potential total return over the next twelve months including the stock's 1.35% dividend yield.
Tempur Pedic (NYSE: TPX) was started with an Outperform rating at William Blair, as they find the current valuation attractive for long-term investor given the company's strong position in the specialty sleep products.
Deutsche Bank resumed coverage of AbitibiBowater (NYSE: ABH) with a Hold rating and $29 target, citing the strength of the Canadian dollar and difficult newsprint fundamentals.
OTHER INITIATIONS:
Banc of America initiated shares of JA Solar (NASDAQ: JASO) and Trina Solar (NYSE: TSL) with Buy ratings and targets of $73 and $76, and initiated Horizon Lines (NYSE: HRZ) and Solarfun Power (NASDAQ: SOLF) with Neutral ratings and targets of $34 and $14.
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Today was another relief trading day on word that Congress has reached a tentative approval of a bipartisan $700 billion financial bailout package. It definitely wasn't from the 
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