Herbalife Ltd. (HLF), Arena Pharmaceuticals, Inc. (ARNA), Vivus, Inc. (VVUS): Stocks to Know for the Obesity Epidemic

As with all small-cap biotechs, shares have been volatile. Over the last year, Arena shares are up over 160%, with most of that gain coming after the FDA’s approval. Since then, shares have calmed down, and have actually declined over 8% in the last six months.

In a note released March 5, analysts at JPMorgan cut their price target on Arena to $7 but maintained their Neutral rating. JPMorgan reasoned that the company’s drug would run into problems given the high out-of-pocket cost. In fact, JPMorgan warned that Belviq could ultimately do worse than Vivus’ Qsymia.

Vivus’ struggles with Qsymia have taken their toll on the stock — trading near $10.50, shares are lower than they were prior to Qsymia being approved. Over the last six months, shares have shed over 40%.

VIVUS, Inc. (NASDAQ:VVUS) has been unable to sell Qsymia to the public, which has attracted interest activist investors. Qvt Financial holds Vivus as the top stock in its portfolio, and has pushed management for a sale of the company.

Investing around the obesity epidemic

Despite the fact that obesity is a growing and dangerous epidemic, no company in particular seems to be well poised to respond to this unfortunate trend.

Weight Watchers and NutriSystem offer effective weight loss programs, but both companies have struggled to attract members in recent months. Meanwhile, Herbalife Ltd. (NYSE:HLF)’s stock is more affected by an ongoing hedge fund dispute than any trends in obesity. And while Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) and VIVUS, Inc. (NASDAQ:VVUS)’ medical solutions seem to be magic bullets, there’s doubts about the drugs actually selling.

In the end, this is one trend investors might wish to stay away from.

The article Stocks to Know for the Obesity Epidemic originally appeared on Fool.com.

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