3 Drug Stocks Hit by Trump’s Call for Lower Prices

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U.S. equities are pulling back again on Tuesday, pushing the Dow Jones Industrial Average down in what could be the first back-to-back decline since January.

3 Drug Stocks Hit by Trump's Call for Lower Prices

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The tape is heavy as political risk continues to grow amid partisan rancor in Washington. The GOP has released its plans to replace Obamacare while President Trump tweeted again about his plans to bring down drug prices.

Wikileaks also released the “Vault 7” information about the CIA’s hacking program, drawing further attention to calls about “Russia hacking/’influence” from the left and “Obama wiretapped me” from Trump.

All of this reduces the chances of bipartisan cooperation on measures like tax reform, deregulation and stimulus spending that Wall Street had assumed would boost the economy and profits this year.

While stocks in general are looking weak, pharmaceutical stocks in particular are getting hit. Here are three large-cap drug stocks to avoid:

Drug Stocks Hit by Trump: Pfizer (PFE)

In a tweet Tuesday morning, Trump’s frequent method of communicating with the American people, he said he is “working on a new system where there will be competition in the Drug Industry.”

The result, he claimed, would be that pricing “will come way down!” via measures like freeing the government to negotiate Medicare/Medicaid purchases.

Pfizer Inc. (NYSE:PFE) will next report results on May 2 before the bell. Analysts are looking for earnings of 67 cents per share on revenues of $13.1 billion.

Drug Stocks Hit by Trump: Merck (MRK)

Merck & Co., Inc. (NYSE:MRK) shares are testing below their 20-day moving average for the first time since late January, treatening to fall out of the worst overbought condition since last August.

In a conference call following its latest earnings report, MRK’s management touted the early traction enjoyed by lung cancer treatment Keytruda which offers a fourth pillar in oncology in addition to surgery, radiation, and chemotherapy. Keytruda is an antibody that activates the body’s own immune system to seek and destroy targeted cancer cells.

While Trump has said, in a meeting with pharma executives last month, he doesn’t want to interfere with incentives to innovate the cost burden on patients needs to be lowered. Either way, profitability will be impacted.

The company will next report results on May 2 before the bell. Analysts are looking for earnings of 84 cents per share on revenues of $9.3 billion.

Drug Stocks Hit by Trump: Allergan (AGN)

Allergan plc Ordinary Shares (NYSE:AGN) shares are dropping down and out of its two-month trading range, threatening to reverse a five-month uptrend.

The company was in the news back in February for its $2.5 billion acquisition of ZELTIQ Aesthetics, maker of the Cool Sculpting System that cools fat cells in the body to induce a natural, controlled elimination process.

The company will next report results on May 10 before the bell. Analysts are looking for earnings of $3.39 per share on revenues of $3.5 billion.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.


Article printed from InvestorPlace Media, https://investorplace.com/2017/03/3-drug-stocks-hit-by-trumps-call-for-lower-prices/.

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