SPECIAL REPORT The Top 7 Stocks for 2024

Beware! 3 Healthcare Stocks Waving Massive Red Flags Right Now.

Advertisement

  • It’s best to steer clear of these healthcare stocks right now.
  • Clover Health (CLOV): Clover Health continues to be a massive loser. 
  • Bristol-Myers Squibb (BMY): BMY shares are going to stay lower. 
  • Moderna (MRNA): Moderna is not like its competitors. 
Healthcare stocks to avoid - Beware! 3 Healthcare Stocks Waving Massive Red Flags Right Now.

Source: Shutterstock

Healthcare stocks generally offer a lot of upside. The cost of healthcare is incredibly expensive in the United States and the companies that deliver it tend to do very well overall. However, as with any sector, there are bound to be losers – and these healthcare stocks to avoid unfortunately make that list.

These companies are showing signs of trouble at the moment which is enough to spur investors to avoid them. In fact, the companies discussed here are showing substantial signs of distress. Additionally, as September has historically been difficult for investors, it would be best for these healthcare stocks to buy ones you avoid.

Clover Health (CLOV) 

Clover Health (CLOV) company logo on a website with blurry stock market developments in the background, seen on a computer screen through a magnifying glass.
Source: Dennis Diatel / Shutterstock.com

Clover Health (NASDAQ:CLOV) isn’t headed toward any immediate demise. Instead, the medicare advantage insurer and SPAC start-up from Chamath Palihapitiya should continue to hang on and peter away.

Clover Health boasts roughly $690 million of liquidity so it is in no danger given that it lost just under $29 million in Q2. That said, Clover Health is just not a good investment. The stock is worth $1 and change. It IPO’d at $15 after as one of many SPAC firms from Chamath Palihapitiya that have not done well.

Revenues are way down, the company continues to produce substantial losses, though smaller, and the outlook remains bleak.

Clover Health’s guidance says that EBITDA losses should range between $70 to $120 million in Q3. The company is all over the place but continues to produce deep losses, ultimately making it one of the healthcare stocks to avoid. Expect them to continue and expect Clover Health to peter out as a result.

Bristol-Myers Squibb (BMY)

Bristol-Myers (BMY) logo at the top of a cellphone.
Source: Piotr Swat / Shutterstock.com

Bristol-Myers Squibb (NYSE:BMY) might be a big-name pharmaceutical firm but its stock is headed in the wrong direction. It has fared poorly so far in 2023 and there’s little reason to expect that will change soon.

Investors don’t need to do much research beyond taking a cursory look at its most recent financial statements. They should be enough to convince investors to stay away from the company.

The company is highly dependent on two drugs, Revlimid and Eliquis, for overall sales. The two drugs accounted for more than 47% of the company’s 2022 revenues. However, they are being challenged by generic competitors. As a result, the company had to cut its full-year guidance for Revlimid. That news is a clear deterrent for investors and a red flag in general. The fact that Q2 revenues came in significantly lower than expected made it all the worse.

Investors should not expect BMY shares to turn around absent very positive news. There’s no reason to anticipate that any time soon.

Moderna (MRNA)

Moderna logo is seen at the entrance to its headquarters in Cambridge, Massachusetts. Moderna, Inc., (MRNA) is an American pharmaceutical and biotechnology company.
Source: Tada Images / Shutterstock.com

Moderna (NASDAQ:MRNA) stock is going to continue to fall as the company moves away from its vaccine victory. The company is taking a page out of Pfizer’s (NYSE:PFE) playbook but that is unlikely to work.

Moderna plans to launch 15 new products over the next 5 years. Pfizer has recently marketed similar plans and announced a goal to release roughly 20 products over the next 18 months. Both firms have obvious similarities. Vaccine successes fueled massive price increases as revenues spiked. In 2023 they suffered as vaccine sales rapidly dissipated. Moderna is experiencing the realities of living and dying by the sword of pharmaceutical success.

However, there are differences that separate Moderna from Pfizer. Its revenues have declined much, much more severely, falling by 95% in Q2. It very well could live and die by vaccine revenues. Pfizer, to continue the comparison, has seen a much more gradual fall off, as it was already well-established as one of the biggest pharmaceutical firms before the pandemic erupted. It owns a diverse portfolio of revenue-generating therapeutics. It also has much more experience navigating the cyclicality of pharma sales. Moderna lacks those factors and that makes it far too risky.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2023/09/beware-3-healthcare-stocks-waving-massive-red-flags-right-now/.

©2024 InvestorPlace Media, LLC