Earnings, Upgrades, and Positive Trial Results: Healthcare Recap

Earnings, positive trial results, and rating changes dominated healthcare news on Thursday, with shares of Celgene, Pfizer, and Tenet Healthcare getting a move.

Celgene (NASDAQ:CELG): Current Price $97.49

Earlier this month, shares of Celgene were on the rise, and analysts at Jefferies, Stifel Nicolaus, and Piper Jaffray were all lifting their price targets. Piper Jaffray upgraded the biotech company to Overweight from Neutral and RBC upgraded its rating on Celgene to Outperform from Sector Perform, increasing its price target to $100 from $90. The slew of positives assessments were in response to Celgene’s updated guidance for the year. On January 7, the company said it expected income for 2012 to be at the higher end of its previous estimate.

But Celgene reported lackluster earnings results on Thursday, sending shares down close to 1 percent, below their 20-day, 50-day, and 100-day simple moving averages.

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For the three-month period, the company’s net earnings fell 36 percent to $263.1 million, or 61 cents a share, as the result of restructuring and acquisition-related charges. However these additional expenses came as the company prepared to enter its “next phase of growth” with the launch of new treatments. And there is evidence of growth already: revenue for the quarter rose 13.3 percent to $1.45 billion thanks to strong sales of cancer drugs.

It appears that future growth will be strong as well, given Celgene’s drug pipeline. The company expects to file for regulatory approval of its arthritis drug Apremilast and Pomalyst, its treatment for multiple myeloma, this year.

The company forecast revenue of $6 billion for 2013.
Pfizer (NYSE:PFE): Current Price $26.85

For Pfizer, which has seen profits decrease by a year-over-year average of 14.8 percent over the past four quarters, the strength of its drug pipeline is of utmost importance. For this reason, shares of Pfizer reacted positively to the company’s announcement of successful trial results of three of its approved drugs: Toviaz, Pristiq, and Chantix.

Eight milligrams of Toviaz, taken once per day, helped patients with overactive bladders more than smaller dosages. Meanwhile, Pristiq was shown to be an effective treatment against depression in adult patients and Chantix helped smokers quit even if they had tried unsuccessfully to quit previously.

These results turn even more important as Pfizer prepares to release its latest earnings on Tuesday, January 29, and analysts predict revenue to decline 14 percent from the prior-year quarter.
Tenet Healthcare (NYSE:THC): Current Price: $38.64

With Tenet Healthcare’s contract disputes coming to an end, analysts at Raymond James believe the hospital operator can capitalize on its strengthened balance sheet and see future growth as a result of Obama’s overhaul of the healthcare system, Bloomberg said.

Tenet said earlier this week that it would issue $850 million in senior secured notes at an annual rate of 4.5 percent to buy its 10 percent senior secured notes that come due in 2018. Based on this new debt, Raymond James wrote that Tenet will be able to save $30 million in interest expenses. Furthermore, the firm’s analysts John Ransom and Nicholas Jansen also noted that the U.S. Affordable Care Act will likely result in fewer uninsured patients, and therefore more revenue for hospitals. These positive changes to the company’s financials prompted the analysts to raise their rating on the hospital operator’s shares.

The company also secured another revenue source this week. Managed-care provider Health Net (NYSE:HNT) announced on Thursday that it had signed multi-year agreements to allow its customers to receive care at all 11 Tenet Healthcare hospitals in California. Previously, the insurer had ended contracts at several hospitals because of disagreements over the cost of care.

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