The stock market as a whole had a rough first half of the year, but the healthcare sector was hit especially hard – particularly drug makers. With the economy struggling to grow, investors are looking for value and are especially apprehensive about paying a premium on shares for developers working on experimental-stage devices and drugs.
But the healthcare sector’s decline has also dragged down several profitable companies that perform consistently well. These two healthcare stocks are significantly undervalued, making them a bargain deal for value investors.
1. Celgene (CELG)
Celgene has been under pressure after slightly lowering its fiscal 2017 guidance, but the company has several growth avenues that investors shouldn’t overlook.
Celgene’s inflammatory and oncology drugs are what drive growth, with Revlimid still maintaining 15% annual growth. Otezla, an oral anti-inflammatory, is quickly moving toward blockbuster status. Pomalyst, a multiple myeloma drug, is expected to continue building on its blockbuster sales moving forward.
Celgene also recently purchased Receptos for $7.2 billion, with its lead product, ozanimod, posting promising results that may lead to approvals in the treatment of ulcerative colitis and multiple sclerosis.
The company has also partnered with 30 companies to research innovative inflammatory, oncology and immunology therapies.
2. Ligand Pharmaceuticals (LGND)
Ligand is a bit of an anomaly in the healthcare sector, with the stock rising 14% this year. But despite these gains, it’s still a cheap stock.
What makes Ligand special is that it’s a royalty-based company. Its Captisol technology enhances the stability and solubility of drugs, so Ligand receives a percentage of the revenue from sales of every drug that uses the technology.
Currently, there are 13 approved products and over 140 products in the development stage that are using Captisol.
Ligand also has little overhead costs, as the company does not run extensive and costly clinical trials. For this reason, expenses are incredibly low for a biotech company.
