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Citi Research strategists have lowered the health care sector (NYSEARCA:XLV) to underweight.
In a U.S. Equity Strategy report, Scott Chronert wrote that they have struggled with “uninspiring” growth in equipment and services.
In addition, analysts have seen an expected fundamental inflection in pharmaceuticals priced in due to high valuations.
“Earnings trends point to consistent growth, but margin expectations are not inspiring,” Chronert said. “Despite solid positive revision trend, growth expectations have not moved higher.”
Therefore, pharmaceuticals, biotechnology and life sciences are downgraded to underweight. Relative performance has been poor despite the weight loss drug euphoria, he said.
These are the top buy-rated stocks within the sector, ranked by their expected total return (or ETR):
- Arcus Biosciences Inc. (RCUS) – ETR: 142%
- Catalyst Pharmaceuticals Inc. (CPRX) – ETR: 66%
- Insulet Corp. (PODD) – ETR: 48%
- OraSure Technologies Inc. (OSUR) – ETR: 47%
- Schrodinger Inc. (SDGR) – ETR: 46%
- Bristol-Myers Squibb Co. (BMY) – ETR: 45%
- Incyte Corp. (INCY) – ETR: 42%
- Penumbra Inc. (PEN) – ETR: 41%
- Exelixis Inc. (EXEL) – ETR: 30%
These are the top sell-rated stocks:
- Mettler-Toledo International Inc. (MTD) – ETR: -27%
- Integra LifeSciences Holdings Corp. (IART) – ETR: 9%
