Healthcare stocks are suffering a wild ride in trading on Tuesday after hopes of a Senate vote on “Trumpcare” collapsed amid Republican infighting and stalwart resistance from Democrats looking to defend the Affordable Care Act. Moreover, three Senate Republicans have said they will not support a straight repeal vote to scrap Obamacare without a replacement plan.
President Donald Trump, in a tweet, warned that Obamacare would collapse under its own weight — regardless if Congress takes action — and that the political pressure to do something will only grow on the holdouts.
After an initial drop at the open, the Health Care SPDR (ETF) (NYSEARCA:XLV) has closed its losses to trade near the unchanged line. The volatility is likely far from over, however, as the entire sector looks set to lose some of the post-election optimism that boosted the XLV nearly 25% from its November low.
Here are three stocks at risk:
Healthcare Stocks to Watch: AmerisourceBergen (ABC)
Shares of drug wholesaler AmerisourceBergen Corp. (NYSE:ABC) have dropped below their 50-day moving average for the first time since April to end a four-month uptrend. This continues a three-year sideways pattern after shares peaked at $117 back in 2015. The stock was recently downgraded by analysts at Bank of America Merrill Lynch.
When the company last reported results on May 4, earnings of $1.77 per share were nine cents ahead of estimates on a 4.1% jump in revenues. Fresh numbers will be reported on Aug. 3 with analysts looking for earnings of $1.38 per share on revenues of $39.1 billion.
Healthcare Stocks to Watch: Perrigo (PRGO)
Shares of Perrigo Company plc Ordinary Shares (NYSE:PRGO) — maker of a variety of over-the-counter treatments and products — are rolling lower within the confines of a trading range going back to January. Watch for a violation of the May lows setting up a test of the April bottom near $66, which would be worth a near 10% decline from here.
The company will next report results on August 3 before the bell. Analysts are looking for earnings of 92 cents per share on revenues of $1.18 billion. When the company last reported on May 30, earnings of $1.05 per share beat estimates by six cents on a 11.4% drop in revenue.
Nevertheless, on June 5, RBC Capital Market analysts issued a downgrade of PRGO stock.
Healthcare Stocks to Watch: Bristol-Myers Squibb (BMY)
Shares of drugmaker Bristol-Myers Squibb Co (NYSE:BMY) are threatening to drop back below their 200-day moving average, setting up a retest of sideways channel support near $52. A failure to hold that level would mean a drop to the late January low near $46 — a 15% decline from here. Long-term investors are no doubt growing frustrated, as shares have been mired in a three-year-old rounded topping pattern.
The company will next report results on July 27 before the bell. Analysts are looking for earnings of 73 cents per share on revenues of $5.1 billion. When the company last reported on April 27, earnings of 84 cents per share beat estimates by 10 cents on a 12.3% rise in revenues.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. A two-week and four-week free trial offer has been extended to Investorplace readers.
