In this article, we will take a look at the 10 healthcare stocks with insider buying. To see more such companies, go directly to 5 Healthcare Stocks with Insider Buying.
Investors were processing inflation report on August 10 to find clues on the Federal Reserve’s possible moves. CPI’s growth in July was identical to that of June’s. Investors are hopeful that cooling inflation could cause the Federal Reserve to pause its rate hikes. However, not everyone is hopeful. On August 16, meeting minutes from the Fed's latest session showed that the central bank is ready to continue its hawkish stance if inflation does not come down to its targeted levels.
In July, JPMorgan published its mid-year outlook report in which it said that inflation is not expected to come to the levels the Federal Reserve is targeting since the report said “inflation psychology” has changed and supply chain damages that started the inflation storm was more lasting than expected. JPMorgan also said in its report that it expects a mild recession in the second half of 2024. It also believes that in 2024 unemployment could reach the levels where the Federal Reserve could begin easing its monetary policies. However, before that, the bank is seeing a lot of pain.
“We see unattractive risk-reward for equities and increasing investor complacency ahead of our expectation that the business cycle will further decelerate in the second half of the year, with the onset of a recession likely in the fourth quarter of 2023 or first quarter of 2024. What’s more, consumers are starting to show signs of weakness, and there is a risk that liquidity and credit conditions could tighten in the coming months.”
The JPMorgan report also said that the effects of monetary tightening take some time to realize. In this backdrop, the bank said that the market’s view that the worst might be behind us could be wrong since we are yet to see the real effects of the rate-hike spree and many positive factors like savings and high margins are deteriorating.
Since in this article we take a look at healthcare stocks with insider activity, it’d be pertinent to take a look at the industry outlook of the healthcare sector. JPMorgan said in a report that investments in the healthcare sector skyrocketed in 2021 but in 2022 stock valuations fell as investors cut back on spending amid a changing macro outlook. The report said that technology is the main theme of the industry right now as it could solve the biggest problems in the industry such as shrinking workforce, long waiting times, increasing costs, etc.
McKinsey estimates healthcare profit pools will expand at a 4% CAGR to $790 billion in 2026 from $654 billion recorded in 2021. Previously, the firm had estimated a 6% CAGR growth but increasing inflation and related problems caused a change in this outlook. However, McKinsey believes that the inflation will be able to come out of the short-term problems by 2024. Amid increasing population and healthcare needs, the sector is bound to grow and many areas are especially expected to see strong growth over the coming years. One such high-growth area in the healthcare industry is healthcare services and technology. To tackle challenges in the industry, government and private sectors are using different technology solutions. This is driving growth of the sector. The McKinsey report said:
“However, we see solid growth in the sector starting in 2023, especially as technology adoption by providers and payers continues to accelerate. We now estimate a 10 percent CAGR between 2021 and 2026, to $81 billion by 2026. This is a one percentage-point- higher CAGR than our July estimates last year for 2021 to 2025 growth, due to greater demand from payers and providers looking to improve efficiency. That would make it the fastest-growing sector in healthcare. We see the greatest acceleration in software and platforms (for example, patient engagement and clinical decision support) as well as data and analytics, with 13 percent and 19 percent CAGRs, respectively.”
The McKinsey report said that increases in prices in the healthcare services and technology sector are tolerated if they add value in the product cycle. Since companies are looking to cut costs and solve the problem of understaffing, they are willing to spend on technology solutions that will help them save money in the long run.
We have pointed out staffing and increasing costs problems in the healthcare sector in our paragraphs above. But a report from Signet quantifies these problems and shares some data that highlights the gravity of the situation. The report said total costs in the healthcare industry were expected to jump a whopping 62% year over year mainly due to inflation, labor wage growth and rising interest rates. The report also highlighted that the healthcare industry will face a gap of a whopping 190,000 to 440,000 registered nurses. On the other hand, there would be a shortage of 48,000 to 75,000 doctors.
Healthcare Stocks with Insider Buying
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Our Methodology
For this article we used Insider Monkey’s stock screener to find healthcare stocks with heavy insider buying activity over the past three months. We chose only the healthcare stocks which saw insider buying activity from directors, officers or executives.
Healthcare Stocks with Insider Buying
10. Black Diamond Therapeutics, Inc. (NASDAQ:BDTX)
Number of Hedge Fund Holders: 8
Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) has been a winner in 2023, having gained about 88% year to date through August 9. In July, Ali Behbahani, a director at Black Diamond Therapeutics, Inc. (NASDAQ:BDTX), bought about one million shares of the company at $5 per share. Since the transaction Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) has lost about 30% in value.
As of the end of the first quarter of 2023, 8 hedge funds tracked by Insider Monkey had stakes in Black Diamond Therapeutics, Inc. (NASDAQ:BDTX). The biggest stakeholder of Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) during this period was Peter Kolchinsky’s RA Capital Management with a stake worth about $4.9 million.
Delaware-based Prelude Therapeutics Incorporated (NASDAQ:PRLD) has a pipeline of novel, small molecule therapies targeting cancer cell growth. David Bonita, a director and 10% owner at Prelude Therapeutics Incorporated (NASDAQ:PRLD), in May 2023 bought 869,565 shares of the company at $5.75 per share. Since the transaction Prelude Therapeutics Incorporated (NASDAQ:PRLD) has lost about 37% in value.
As of the end of the first quarter of 2023, 8 hedge funds in Insider Monkey’s database of 943 funds reported having stakes in Prelude Therapeutics Incorporated (NASDAQ:PRLD). The most significant shareholder of Prelude Therapeutics Incorporated (NASDAQ:PRLD) during this period was Julian Baker and Felix Baker’s Baker Bros. Advisors which owns a $58 million stake in the company.
Life sciences and spatial biology solutions company Akoya Biosciences, Inc. (NASDAQ:AKYA) ranks 8th in our list of the healthcare stocks with insider buying activity. In June 2023, Thomas Raffin, a director at Akoya Biosciences, Inc. (NASDAQ:AKYA), bought about 2 million shares of the company at $5. Another important insider buying activity for Akoya Biosciences, Inc. (NASDAQ:AKYA) came in June when the company’s independent director Matthew Winkler bought $1.02 million worth of stock for $5 per share.
Earlier in August, Akoya Biosciences, Inc. (NASDAQ:AKYA) posted its Q2 results. GAAP EPS in the quarter came in at -$0.51 missing estimates by $0.05. Revenue in the quarter jumped 31.5% year over year to $23.52 million, surpassing estimates by $1.08 million.
Janux Therapeutics, Inc. (NASDAQ:JANX) is a biopharmaceutical company working on its proprietary Tumor Activated T Cell Engager (TRACTr) platform technology for cancer treatment.
In July, Ra Capital Healthcare Fund Lp., with a director and 10% owner status at Janux Therapeutics, Inc. (NASDAQ:JANX), bought about 495,008 shares of the company at $12.46 per share. Since the transaction Janux Therapeutics, Inc. (NASDAQ:JANX) has lost about 4.74% in value.
In July, Janux Therapeutics, Inc. (NASDAQ:JANX) said it priced a ~$60 million underwritten offering of 4.2 million shares and pre-funded warrants to purchase 583.45K shares.
As of the end of the first quarter of 2023, 9 hedge funds tracked by Insider Monkey reported owning stakes in Janux Therapeutics, Inc. (NASDAQ:JANX). The most significant stakeholder of Janux Therapeutics, Inc. (NASDAQ:JANX) during this period was Peter Kolchinsky’s RA Capital Management with an $105 million stake in the company.
Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) ranks 6th in our list of the healthcare stocks with insider buying in the last three months. Artal International S.C.A., which has a director and 10% owner status with Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), bought over $72 million worth of company shares. Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) is still seeing a lot of insider buying activity. For example, earlier in August, Wendy McDermott, an officer with Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), bought 6,000 LXRX shares.
