Which hot healthcare stocks are corporate insiders snapping up right now? Tracking informative insider transactions is a great way of finding compelling investment opportunities from those who know the company best. But be aware that uninformative transactions indicate that an insider is buying/selling shares for reasons that do not necessarily indicate confidence in the company, such as exercising share options. In contrast, informative transactions are deliberately made by insiders, often because they feel the stock is undervalued.
So, bearing this in mind, we turned to the Nasdaq Smart Portfolio’s powerful stock screener. The screener enables investors to filter tickers according to a range of unique options. Here we focused in on the ‘Strong Buy’ Analyst Consensus and ‘Positive’ Insider Signal filters to find the best stocks that are getting top marks from both insiders and the Street. We also looked for only informative buy transactions, rather than uninformative transactions.
From the list of stocks pulled up by the screener, we pinpointed these three hot stocks. Let’s take a closer look now:
Sarepta Therapeutics (SRPT): This ‘Strong Buy’ biopharma is developing a ‘first-in-class’ experimental gene mutation treatment for Duchenne muscular dystrophy (DMD). DMD is a particularly severe type of progressive muscular weakness. Sufferers of this disease face a drastically reduced average life expectancy of under 30. Sarepta is currently working on two experimental treatments for DMD: golodirsen, which is being tested, and Exondys 51, which has conditional FDA approval.
Robert W Baird analyst Brian Skorney has the highest price target on SRPT of $101. He believes the stock can reach by over 78% over the next 12 months. Skorney points out that major insurer Anthem has recategorized Exondys 51 as ‘medically necessary’ rather than just ‘investigational.’ He says this is a significant step in the right direction for Sarepta.
Overall, the stock has a ratio of 12 buy ratings to just 1 hold rating from top analysts in the last three months. These analysts have an average price target of $71- which translates into big upside potential of just over 25%.
On the insider front, we can see that President, CEO and Director Douglas Ingram has just snapped up $1.99 million of SRPT shares. This move comes on the heels of his previous share purchase, also for $1.99 million, four months ago. In total, Ingram holds $24 million of Sarepta stock.
Array BioPharma (ARRY): This is a top healthcare stock to track right now according to signals from both the Street and insiders. Array is focused on the discovery, development and commercialization of targeted small molecule drugs to treat cancer patients. Its key melanoma drug candidates binimetinib (bini) and encorafenib (enco) are currently being reviewed by the FDA. On June 30 2018, the FDA will deliver its verdict on whether these two drugs have the green light to launch.
In the build up to this crunch date, Cantor Fitzgerald analyst Mara Goldstein is feeling bullish on Array’s prospects. She isn’t alone. Overall the stock has received seven back-to-back buy ratings from the Street. These analysts have an average price target on the stock of $14.57, suggesting upside potential of close to 27%.
“The [New Drug Application] filings were based on the COLUMBUS data, which we believe demonstrates a differentiated and potentially best-in-class profile. FDA's preliminary review did not identify any potential roadblocks, leading us to believe that commercialization could begin in 3Q18.” says Goldstein. As a result, she has a buy rating and $15 price target on ARRY. The target is based on a 2022 combined revenue of $700 million.
Insiders also appear optimistic about the stock’s prospects with five consecutive buy ratings in less than 3 months. For example, five-star director Kyle Lefkoff picked up shares of over $50,000 last month. He is now sitting on a holding of over $824,000 in ARRY, alongside a whopping $512 million position in clinical stage biopharma miRagen Therapeutics (MGEN).
Flexion Therapeutics (FLXN): Shares in this innovative specialty pharmaceutical spiked recently. The company’s non-opioid injection for osteoarthritis knee pain has just launched in the US on the back of FDA approval in October. Flexion specializes in developing and commercializing sustained-release versions of existing drugs that can be injected into joints to treat osteoarthritis (OA), a disease which is both progressive and incurable.
Zilretta, the drug that has just been launched. provides pain relief for no less than 12 weeks. Flexion says it has already hired over 100 field sales representatives to promote to physicians the drug across the country.
“We have already begun the process of informing and educating physicians about the important role Zilretta can play in the management of OA knee pain. With its extended-release microsphere formulation, we believe Zilretta holds the potential to disrupt the current treatment paradigm” writes Flexion’s CEO Michael Clayman in the press release.
And it would appear insiders are putting their money where their mouth is, as the saying goes. In the last year insiders have made a series of informative purchases of FLXN. Most recently, CSO Neil Brodick snapped up $66,096 worth of shares on November 22. The CEO also picked up shares of over $100,000 earlier in November. Both these insiders have a five-star rating on TipRanks- Michael Clayman, for example, has a very impressive 92% success rate and 45.1% average return according to TipRanks.
In the last three months, Flexion has received six consecutive analyst buy ratings, giving the stock a ‘Strong Buy’ analyst consensus rating. Meanwhile the bullish average analyst price target of $40.60 translates into upside potential of 58% from the current share price.
Find your own ‘Strong Buy’ stocks right now in the sector that interests you with the Nasdaq Smart Portfolio.