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Prescription for Profit


Last week was a strong week for stocks in the Medical/Drugs sector and these two companies in particular could give your portfolio a needed shot in the arm.

This article was originally published by

It seems every ailment has a cure and every cure, an ailment. Browsing the drug store, you can’t help but feel like “there’s a pill for that,” as prescribed by Dr. Siri. On the other hand, side effects need to be monitored closely. One could draw a similar parallel to investing in pharmaceuticals.

The Medical/Drugs sector of the Zacks Industry Rank list gained 33 positions last week — significant movement for a sector comprised of 97 companies. With positive earnings revisions outpacing negative 143 to 74, the average positive Earnings per Share (EPS) surprise of +10% is remarkable given the size of the sector.

Two of the biotech and pharmaceutical companies have a particularly positive prognosis, moving last week to a Strong Buy from a Buy or Hold rating. This could signal positive future performance for these stocks in response to future positive earnings estimate revisions. While a good indicator of industry health, it’s equally important to understand the fine-print details when mixing with other investments.

Take a look at the following companies and see if they could give your portfolio a needed shot in the arm.

Enanta Pharmaceuticals Inc. (ENTA)

ENTA was upgraded to a Strong Buy last week from Neutral.

Enanta Pharmaceuticals, Inc. is a biotechnology company. It engages in the research and development of molecule drugs for the treatment of infectious diseases such as the hepatitis C virus, respiratory tract infections, intravenous and oral treatments. Considering its strong position in royalties on sales of ABT-450, its low-cost profile could be just the ticket for continued profitability.

Its last earnings surprise was +30%.

Sucampo Pharmaceuticals (SCMP)

SCMP is a Strong Buy. It moved up from a Buy last week.

Sucampo Pharmaceuticals, Inc. is an emerging pharmaceutical company focused on the discovery, development and commercialization of proprietary drugs based on prostones, a class of compounds derived from functional fatty acids that occur naturally in the human body. Sucampo is focused on developing prostones for the treatment of gastrointestinal, respiratory, vascular and central nervous system diseases and disorders.

Sucampo’s last earnings surprise was +400%. 2014 consensus EPS estimates are still drifting higher. This company reports quarterly earnings on March 12, 2014.

John Blank is the Chief Equity Strategist for Zacks.

The information supplied above by Zacks Investment Research Inc. contains opinions based on factual research which may or may not be accurate. Neither Zacks or Intellisphere will assume any liability for losses from investment decisions based on this information.

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