The corona pandemic has changed a lot, including the interests of investors in the stock market. Companies from the health sector have increasingly become the focus of investors. But not only the vaccine developers are worth a look.
• Corona pandemic moves vaccine manufacturer into focus of investors
• Goldman Sachs expects health-tech sector to boost after the pandemic
• Analysts publish share ratings in the diagnostics sector for the first time
Experts are also taking a closer look at the health tech sector. As reported by CNBC , the US bank Goldman Sachs has started to cover the fast-growing, high-margin health technology sector and has forecast that it will get a boost after the pandemic.
For the first time share ratings in the diagnostics sector
The Goldman Sachs analysts released stock ratings in the diagnostics sector for the first time in early June, according to CNBC. Testing for the coronavirus has become commonplace for many people and has resulted in the approval process for health tests accelerating. As a result, companies in the diagnostics sector would likely emerge from the pandemic “growing stronger and faster”. This is also favoured by cheaper technologies and higher demand from an aging population.
The analysts at the major US bank have therefore selected a few companies that they believe are innovative and can diversify revenues across multiple products.
Goldman Sachs recommends buying these stocks
One of the companies Goldman Sachs has confidence in is EXACT Sciences. EXACT Sciences is a molecular diagnostics company specialising in the detection of early-stage cancer. The company is included in the Principal Healthcare Innovators Index ETF (BTEC), which tracks the Nasdaq Healthcare Innovators Index, as the second largest holding. A possible advantage of companies in the BTEC is that the investments are research and development-intensive – which is crucial for success in the highly competitive innovation area of the health care system, reports ETFTrends.com. This commitment could pay off in increasing margins. At EXACT Sciences, the exact margins would be 70 percent and, according to Goldman Sachs, these could increase to 76 percent in the next three years. “The large commercial organisation enables the company to
Also for Guardant Health, a company that develops blood tests to detect cancer early in high-risk groups and monitor relapse in cancer survivors, Goldman Sachs analysts are optimistic. “GH has demonstrated an unmatched ability to develop innovative and high-precision diagnostics with high clinical benefits,” quoted ETFTrends.com as quoting the experts at the major US bank. Guardant – also one of the BTEC holdings – is just outside the top 10 holdings in the Principal Healthcare Innovators Index ETF with a weighting of 1.64 percent. The Guardant Health share shows a negative performance this year: Since the beginning of the year it has fallen by around six percent. The share is currently trading at US $ 120.20 (as of June 18, 2021), around 33 percent below Goldman Sachs’ price target of US $ 160.
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CareDx is another diagnostic company that Goldman Sachs analysts recently highlighted. The company says it wants to improve the results of transplant patients and offers, among other things, genetic matching solutions for pre-transplantation and kit-based monitoring products for post-transplantation. CareDx is also included in the BTEC – with 0.63 percent, however, one of the smaller holdings. CareDx shares have already achieved an impressive performance this year, increasing by 22 percent. They are currently trading at USD 88.64 (as of June 18, 2021). Until the Goldman Sachs target price of 95 US dollars, the papers still have around 7.2 percent room for improvement.
Goldman Sachs also reiterated its purchase recommendation for NeoGenomics , a “cancer diagnostics and pharmaceutical services company that provides oncologists, pathologists, pharmaceutical companies, academic centers and others with innovative diagnostic, prognostic and predictive tests,” as NeoGenomics writes on its website. The analysts left the target price unchanged at 55 US dollars. Since the beginning of the year, the NeoGenomics share has fallen by around 20 percent. The experts believe the paper – based on the current closing price of 43.12 US dollars (as of June 18, 2021) – has an upside potential of around 27 percent.