*Amgen Inc. (AMGN)
Amgen gapped down on some bad news and snapped right back—just what we like to see. Right now, AMGN sells for about 15-16 times earnings and less than 12 times cash flow. There is a lot of pessimism about the stock, but that means opportunity here—for income or conservative growth. With all the bad vibes about, it is encouraging to see AMGN shrug off the bad news after the sell-off and bounce right back, and now it is moving back toward the highs. A good dividend, which will rise, and a good future, A+ outfit—a buy up to $260.
Bob Howard, Positive Patterns, P.O. Box 310, Turners, MO 65765, 417-887-4486, May 18, 2021
*Cerner Corp. (CERN)
Cerner performed well in the first quarter, beating the consensus earnings estimate and growing bookings by 13% year over year. Management expects earnings growth of at least 13% in 2021, up from its earlier estimate of 9%-13% growth. We are boosting our 2021 EPS estimate to $3.25 from $3.20. Our revised estimate assumes growth of 14% for the year. We are also raising our 2022 forecast to $3.65 from $3.60, implying 12% growth from our 2021 estimate.
CERN trades at 24-times our 2021 EPS estimate, below the average of 29 for a healthcare services peer group. Our revised target price of $85, raised from $80, assumes a projected 2021 P/E of 26, still below the peer average, and a potential return of 12% including the dividend.
Jim Kelleher, CFA, Argus Weekly Staff Report, argusresearch.com, 212-425-7500, May 28
*Becton, Dickinson and Company (BDX)
Becton, Dickinson & Company is a global leader in the medical supply industry. The company was founded in 1897 and has grown into an industry giant that operates in 190 countries. The company generates more than $19 billion in annual revenue, with approximately 45% of revenues coming from outside the United States.
Today, BDX operates three segments: Medical Devices, Life Sciences, and Intervention.
BDX showed balanced growth across its geographic markets. The U.S. grew 1.9%, while international markets revenue grew 26%. On the bottom line, BDX’s adjusted earnings per share increased 25% to $3.19 for the quarter.
Along with providing quarterly financial results, the company reaffirmed its guidance for fiscal 2021. BDX management expects adjusted EPS in a range of $12.75 to $12.85. Revenue is projected to grow 10% to 12% for fiscal 2021, on a currency-neutral basis.
Of the company’s 26% international revenue growth, developed nations grew 10% while emerging markets revenue increased by 24%, including 62% growth in China.
BDX spends over $1 billion each year on research and development to further entrench itself as a market leader. This investment in R&D has paid off for the company, as BDX now has over 27,000 active patents and manufactures over 40 billion devices each year.
We expect BDX to generate total returns of 10.9% per year over the next five years. This is a strong expected rate of return, particularly for a steady blue chip dividend stock. As a result, we view BDX stock as a buy for dividend growth investors looking for high total returns.
Ben Reynolds, Sure Dividend Newsletter, suredividend.com, email@example.com, 800-531-0465, May 24, 2021
Privia Health Group, Inc. (PRVA)| Daily Alert May 30
We initiate coverage of Privia with a BUY and $47 PT. Privia is a leader in primary care and physician practice management. Privia’s offering includes a comprehensive technology platform and a strong physician governance structure that helps drive physician practice optimization.
Unlike many other primary care companies, Privia has an asset-light operating model with minimal start-up costs associated with its growth strategy. The company is already profitable given physicians added to the platform typically have a ramped patient panel. Privia is not limited to any one specialty, payer, or reimbursement model. Currently, ~90% of Privia’s business is fee-for-service, and while Privia helps optimize FFS, the company is also focused on shifting to value. This attractive business model is expected to deliver impressive long-term growth (20%+ top-line) and margin (30-35% adj-EBITDA) targets.
We are initiating coverage with a $47 price target, which is based on 3.4x our 2022 adjusted EBITDA estimate. This implies a ~20-25% discount to a peer group of healthcare services companies that currently trades at 4.3x.
Richard Close and Brian Hoffman, Canaccord Genuity Research, canaccordgenuity.com, May 24, 2021