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Healthcare stocks are looking attractive, says iA Capital

Investors should be gearing up for some movement in the biotech space, says iA Capital Markets analyst Chelsea Stellick, who released a Healthcare sector report on Wednesday where she provided updates on 17 stocks under coverage.

Stellick said biotech stocks have been trading at less than cash value but they should see some life in 2023, pointing to the first major deal of the year — AstraZeneca’s purchase of CinCor Pharma for up to US$1.8 billion. Stellick said the price, which represents a 206 per cent premium to CinCor’s current share price, provides realization of the upside potential in clinical development programs, something that has lately been disregarded, the analyst said.

CinCor recently announced Phase 2 trial results that did not meet a critical endpoint, but Stellick said a separate Phase 2 trial concurrently released showed promising results.

“CINC’s lead candidate is baxdrostat, a potential blockbuster blood pressure regulatory drug that complements AZ’s kidney drug portfolio. We see this deal as a strong indicator of Big Pharma’s returning appetite for deal-making in the face of compelling biotech undervaluation,” Stellick wrote.

In other healthcare news, the analyst singled out Neighbourly Pharmacy as a potential beneficiary of cold and flu cases which have spiked across North America and the UK following economic reopening and lower viral immunity levels, both of which caused a surge in demand for over-the-counter cough and painkiller medication.

Stellick said the end result would be good for Neighbourly, which owns a chain of independent pharmacies.

“Once manufacturers have optimized the production process over the short term we anticipate a supply recovery, which would elevate Neighbourly Pharmacy’s front-of-store business segment this fiscal quarter,” Stellick said.

Overall, Stellick said the Healthcare space is supported by many long-term tailwinds including demographics, favourable public policy, increased adoption of technology and government support for innovation.

“We firmly believe that healthcare will bring outsized returns as a long-term portfolio holding,” she said.

The following are iA Capital’s ratings and targets on 17 companies, with all projected returns listed as of the February 1 publication of Stellick’s report.

Consumer Health Staples

Stock: DRI Healthcare Trust (DRI Healthcare Trust Stock Quote, Charts, News, Analysts, Financials TSX:DHT.U)

iA Capital rating: Buy

iA Capital price target: $15.50

Projected 12-month return: 109 per cent

Stock: HLS Therapeutics (HLS Therapeutics Stock Quote, Charts, News, Analysts, Financials TSX:HLS)

iA Capital rating: Buy

iA Capital price target: $23.00

Projected 12-month return: 146 per cent

Stock: Neighbourly Pharmacy (Neighbourly Pharmacy Stock Quote, Charts, News, Analysts, Financials TSX:NBLY)

iA Capital rating: Buy

iA Capital price target: $33.00

Projected 12-month return: 64 per cent

Stock: Valeo Pharma (Valeo Pharma Stock Quote, Charts, News, Analysts, Financials TSX:VPH)

iA Capital rating: Buy

iA Capital price target: $1.50

Projected 12-month return: 138 per cent

Healthcare Operators

Stock: CareRx Corp (CareRx Stock Quote, Charts, News, Analysts, Financials TSX:CRRX)

iA Capital rating: Buy

iA Capital price target: $6.50

Projected 12-month return: 151 per cent

Stock: Hamilton Thorne (Hamilton Thorne Stock Quote, Charts, News, Analysts, Financials TSXV:HTL)

iA Capital rating: Buy

iA Capital price target: $2.50

Projected 12-month return: 62 per cent

Stock: Medical Facilities (Medical Facilities Stock Quote, Charts, News, Analysts, Financials TSX:DR)

iA Capital rating: Hold

iA Capital price target: $11.00

Projected 12-month return: 38 per cent

Stock: Microbix Biosystems (Microbix Biosystems Stock Quote, Charts, News, Analysts, Financials TSX:MBX)

iA Capital rating: Buy

iA Capital price target: $1.00

Projected 12-month return: 170 per cent

Stock: Quipt Home Medical (Quipt Home Medical Stock Quote, Charts, News, Analysts, Financials TSX:QIPT)

iA Capital rating: Buy

iA Capital price target: $14.00

Projected 12-month return: 82 per cent

Healthcare Technology

Stock: Carebook Technologies (Carebook Technologies Stock Quote, Charts, News, Analysts, Financials TSXV:CRBK)

iA Capital rating: Buy

iA Capital price target: $0.70

Projected 12-month return: 669 per cent

Stock: Dialogue Health Technologies (Dialogue Health Technologies Stock Quote, Charts, News, Analysts, Financials TSX:CARE)

iA Capital rating: Buy

iA Capital price target: $6.00

Projected 12-month return: 62 per cent

Biotechnology

Stock: Alpha Cognition (Alpha Cognition Stock Quote, Charts, News, Analysts, Financials TSXV:ACOG)

iA Capital rating: Speculative Buy

iA Capital price target: $5.00

Projected 12-month return: 1120 per cent

Stock: Arch Biopartners (Arch Biopartners Stock Quote, Charts, News, Analysts, Financials TSXV:ARCH)

iA Capital rating: Speculative Buy

iA Capital price target: $6.00

Projected 12-month return: 117 per cent

Stock: IMV Inc (IMV Inc Stock Quote, Charts, News, Analysts, Financials TSX:IMV)

iA Capital rating: Speculative Buy

iA Capital price target: $5.00

Projected 12-month return: 75 per cent

Stock: LexaGene Holdings (LexaGene Holdings Stock Quote, Charts, News, Analysts, Financials TSXV:LXG)

iA Capital rating: Speculative Buy

iA Capital price target: $0.50

Projected 12-month return: 117 per cent

Stock: NervGen Pharma (NervGen Pharma Stock Quote, Charts, News, Analysts, Financials TSXV:NGEN)

iA Capital rating: Speculative Buy

iA Capital price target: $6.00

Projected 12-month return: 180 per cent

Stock: Sernova Corp (Sernova Stock Quote, Charts, News, Analysts, Financials TSX:SVA)

iA Capital rating: Speculative Buy

iA Capital price target: $3.00

Projected 12-month return: 163 per cent

 

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Jayson MacLean

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.

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