It looks like politics is shaking up the healthcare industry. Several blue-chip healthcare stocks have been on the slide in recent weeks. The cause? It could be the recent nomination of Robert F. Kennedy Jr. as the Secretary of Health and Human Services for the incoming Trump administration.
Throughout the election cycle, Kennedy has been vocal about his desire to make big changes at several agencies, including the Food & Drug Administration (FDA). This has introduced uncertainty for businesses that work with the agency, especially pharmaceutical companies.
Are You Missing The Morning Scoop? Breakfast News delivers it all in a quick, Foolish, and free daily newsletter. Sign Up For Free »
While it remains to be seen what will come of all this, the fear has knocked some prominent dividend-paying healthcare companies down to appetizing valuations that long-term investors should consider taking advantage of.
Here are three compelling buys to look into today:
Shares of pharmaceutical giant AbbVie (NYSE: ABBV) are currently trading down over 18% from their high. But it’s not just political angst dropping the stock; AbbVie paid $8.7 billion to acquire Cerevel last year, seeking the company’s pipeline of psychiatric drugs. However, Cerevel’s schizophrenia drug emraclidine unexpectedly failed its clinical trials, raising severe doubts that AbbVie will get much return on that nearly $9 billion investment.
It’s not ideal that such a promising asset has fallen on its face. Still, AbbVie is a well-diversified drug company with plenty of growing products that have helped offset the losses from Humira, a mega-blockbuster product that came off of its patent protection last year. Notably, the stock’s fantastic dividend is on solid ground. AbbVie currently yields 3.7%, and its dividend payout ratio is just 56% of its estimated 2024 earnings. So, the failure of emraclidine hurts, but it doesn’t make or break AbbVie.
The stock now trades at a forward P/E ratio of 15. Meanwhile, analysts estimate AbbVie’s earnings will grow by an average of 8% to 9% annually over…
..
