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.
We set the filters as below:
From the list of stocks pulled up by the screener, we pinpointed these three hot stocks. Let’s now take a closer look:
1. Nektar Therapeutics (NKTR)
This fast-growing biopharma has five back-to-back buy ratings from the Street and some interesting insider buying. Nektar boasts an R&D pipeline of new investigational drugs which include treatments for cancer, auto-immune disease and chronic pain. Shares are up from $13 at the start of the year to the current share price of $21.60. And the best part is that analysts are predicting Nektar can grow by another 31% in the next 12 months.
HC Wainwright analyst Corey Davis recently initiated coverage on Nektar with a bullish $31 price target. He is confident on Nektar’s partnered portfolio which has two commercial products, including Movantik (developed with AstraZeneca), plus five mid to late stage clinical candidates. These drug candidates should provide positive near-term catalysts on the stock, which Davis believes can reach its target revenue of $375-$450 million by 2021.
As for insider transactions, in the last half-year NKTR has seen three big insider buys and no insider sells. The most recent transaction comes from company director Roy Whitfield. He picked up shares worth $628,250 on August 14, bringing his total holding to $882,950. Overall Whitfield, who has insider holdings of $105 million across 3 healthcare stocks, has a very successful track record. On TipRanks, for example, he is ranked #2,419 out of 38,624 insiders.
2. Exact Sciences (EXAS)
Exact Sciences has one primary goal: to help win the war on cancer through early detection. So far, its Cologuard product is the first and only FDA approved noninvasive colorectal cancer screening test. And it is proving to be very successful for Exact Sciences. Share prices surged 8% following very strong Q2 results, with EXAS raising revenue guidance to $230-240 million for 2017, up from $195-205 million previously.
The results convinced several analysts to raise their EXAS price targets considerably. Both Craig-Hallum and Roth Capital boosted their price targets to $46 from $41 and $40 respectively. Meanwhile five-star Canaccord Genuity analyst Mark Massaro says: “EXAS delivered another terrific quarter and is executing on all cylinders, reporting a major beat-and-raise above the ‘blowout’ case we previewed. Given the major beat particularly on the GM line, we are getting a much faster and clearer glimpse of the operating leverage this business has.”
Overall, the stock has a ‘Strong Buy’ analyst consensus rating with 7 buy ratings and just 1 hold rating in the last three months. We can also see that in the last three months, insiders have purchased shares worth $1.56 million. Indeed, on August 17, five-star Kevin T. Conroy (President, CEO and director) picked up a further holding of EXAS shares worth $1,146,920. He now owns over $35 million EXAS shares. Conroy has a 100% profitable transaction rate and 68% average return across his 8 transactions.
3. Sarepta Therapeutics (SRPT)
Biopharma Sarepeta is a top stock to track. Shares spiked 20% recently on the back of a very strong second quarter. The results included $35 million in sales of Sarepta’s Duchenne muscular dystrophy drug, Exondys 51, vs the expected $23 million. Looking forward, a crucial catalyst is expected for the drug in Q4 2017: “We expect investors will be solidly focused on the 4Q dystrophin data readout as that could increase perception of the viability of the platform and commercial durability of Exondys 51,” says top Morgan Stanley analyst Matthew Harrison.
The icing on the cake: Sarepta has now signed a patent settlement with rival BioMarin Pharmaceutical and secured a $100 million debt financing deal. TipRanks reveals that the stock has a very impressive ‘Strong Buy’ analyst consensus rating with 10 buy ratings and just 1 hold rating. Note that the average analyst price target of $63.50 represents huge upside potential of just over 54% from the current share price.
Insiders have made five informative buy transactions of Sarepta shares in the last year. The biggest transaction is also the most recent- Douglas Ingram (President, CEO and director) snapped up SRPT shares worth $1.99 million. He now owns $13.9 million of Sarepta shares.
Find your own “Strong Buy” stocks in the sector that interests you the most. Go to the Nasdaq Smart Portfolio stock screener now.