Buy 2 health stocks. They’re already disappointed enough with Trump RFK Jr.’s HHS picks | Wilnesh News
We will purchase 25 shares of Danaher stock at approximately $229 per share. Jim Cramer’s charitable trust will hold 550 shares of DHR stock after Monday’s trade, increasing its weight from 3.4% to about 3.6%. The healthcare industry has been the market’s biggest loser since the election. If the SPDR Healthcare Industry Fund, commonly known as XLV, moves lower on Monday, it will be its sixth consecutive session of losses. The organization faces huge uncertainty after President-elect Donald Trump selected Robert F. Kennedy Jr., a vaccine skeptic and obesity drug critic, to be Health and Human Services secretary. There’s nothing markets hate more than uncertainty, which is why stocks fall sharply when policy views are unclear. But uncertainty can also create opportunities. We never want to downplay the risks – but at a certain level, the price of a stock will reflect too many potential changes, reflecting outcomes that may be too severe. If things turn out better in real life than initially feared, buying a high-quality healthcare brand at these prices could be a good deal. We wouldn’t go big on buying here as uncertainty is likely to persist for a while, but some of these stocks are already oversold. That’s why we turn to a few healthcare stocks that have been hammered over the past few weeks. Since the election, Danaher’s stock has fallen from $250 to $230 a share, while Eli Lilly’s stock has fallen from $806 to $720. DHR YTD mountain Danaher YTD Danaher reported better-than-expected quarterly results and its bioprocessing business returned to growth. Bioprocessing is the use of cellular components to create a variety of products, including targeted therapies such as vaccines. Danaher has received significant business from vaccine manufacturers during the coronavirus pandemic. Danaher came under pressure after Robert F. Kennedy Jr. was selected, in part because of concerns about funding for the National Institutes of Health, part of the National Institutes of Health and the U.S. Department of Health and Human Services. But as Leerink analysts estimated in a research note on Monday, less than 1% of Danaher’s revenue comes from NIH funding. The other side of the risk for Danaher is if pharmaceutical companies cut back on R&D due to regulatory changes. That will be something to watch going forward, but we think Danaher shares trade at about 27 times 2025 earnings estimates, reflecting some of the risk. Alternatively, had our trade been unrestricted, we would have purchased 5 shares of Eli Lilly for approximately $718 per share. These 5 shares represent half of what we sold in early September, when the stock was trading around $960. Eli Lilly shares fell from $903 to $846 year-to-date after a disappointing third-quarter report that saw stockpiles of its fast-selling GLP-1 drug lead to the company missing expectations and lowering its earnings. Full year guidance. We were troubled by Eli Lilly’s post-quarter information but encouraged in the days that followed as management reiterated to the analyst community that the miss was purely destocking driven and not based on fundamentals or underlying demand . But RFK Jr.’s possible appointment creates a host of uncertainties for Eli Lilly and the drug stock as a whole. Last week we pointed out RFK Jr.’s criticism of obesity drugs, and his two main issues were pricing, and his belief that changes in diet and food systems are better ways to address high obesity rates. Of course, pricing may become a bigger issue in the future, but the ability of science and drugs to treat obesity and other diseases is undisputed. Eli Lilly’s recent revisions put the stock at just over 30 times FactSet’s consensus 2025 adjusted earnings estimate of $22.52 per share. If you look ahead to 2026, Eli Lilly’s stock price is about 24x. While these multiples are higher than other drug stocks, we think it’s cheap considering the company’s top-line growth will continue as GLP-1 supply capacity catches up with demand. Another thing to keep in mind is that Eli Lilly does not face a significant patent cliff or IRA pricing risk over the next decade. (Jim Cramer’s Charitable Trust is long DHR, LLY. See here for a full list of stocks.) As a subscriber to Jim Cramer’s CNBC Investing Club, You will receive trade alerts before Jim Cramer trades. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms and Conditions and Privacy Policy and our Disclaimer. No fiduciary duty or obligation is created or created by any information you receive in connection with the Investment Club. No specific results or profits are guaranteed.
