In this piece, we will look at Jim Cramer’s bold predictions about these healthcare stocks.
Healthcare has been one of Jim Cramer’s favorite topics lately. The tail end of the year has pushed a portion of the sector, namely healthcare benefit managers and pharmaceutical chains, into Wall Street’s spotlight. Investors were particularly anxious after President-elect Trump’s remarks during a press conference at Mar-e-Lago. At the event, he promised to take on the healthcare middleman due to the high costs that Americans were facing. Americans are “paying far too much. . . .much more than other countries” for healthcare, shared Trump. He pointed at what he believes is the heart of the problem. According to Trump, “We have a thing called the middle man, you know, the middle man right? The horrible middleman that makes more money frankly than the drug companies. And they don’t do anything except they’re a middleman.”
The role played by the healthcare middlemen has also made the President-elect vow to “knock out the middle man” despite understanding that he’s “going to be very unpopular after that.” Cramer has spent several shows discussing either the broader impact of the President-elect’s goal on the benefits management industry or the impact on specific companies. After Trump shared his plans for the middlemen, Cramer pointed out that the industry does enjoy significant reach.
He shared “I think that what, if President-elect Trump follows up about knocking out the middleman, he will. He will because these companies will eventually lose their support in Congress.” This is because Cramer believes that once the different levers of the US government (Republicans, Democrats, and the Executive) act in unison then, “when you have that kind of come together over them, you don’t wanna be in that business.”
However, he cautioned that the big companies are not completely vulnerable. “These companies are not, uh, without their friends,” shared Cramer. He also added that the firms also “resent the middlemen. Cardinal’s had a lot to be able to be a little bit more forward about what can be done. [MCK] is considered to be a company that has done a lot to be able to make it so smaller drug stores get product.”
Yet, while the companies might have friends, some of them are vulnerable as well. Later during his show, Cramer commented on the firm that ranks 13th on this list. He shared that this firm is “viewed as being part of the problem of the cost of healthcare,” and added that “they have no friends.” He also mentioned another firm in a later program. This stock ranks 6th on our list of stocks Cramer talked about after the Fed’s interest rate cut.
He believes that “Look I think that if I were the people at [the healthcare benefit managers], when the President-elect decides that he is going to take a shot at you, as we know from his first time around, it’s not one off. There’s multiple shots. Multiple attempts to say listen you guys are . . . friction. I would not buy these stocks.” Commenting on President-elect Trump and his partner Elon Musk, Cramer commented “I mean these guys are powerful one-two combination.”
The rather sharp remarks for the pharma benefits manager were somewhat of a departure from Cramer’s earlier comments. For the same stock, he shared “Can we just say that the middlemen have been under fire for decades. And they are always, they always, McKesson is always standing. McKesson has just defied everyone. Right. They defy everybody. No one can touch McKesson.”
Overall though Cramer believes that the healthcare benefits management sector might be in for trouble in the future. Investors also appear to be cognizant of this reality with some stocks down 45.57% year-to-date. Within this turmoil, let’s see how his previous stock predictions have fared.
Our Methodology
To compile our list of Jim Cramer’s bold predictions about healthcare stocks, we scanned the stocks he mentioned in Mad Money and Squawk on the Street as far back as in August. Then, we picked out pharma, hospital management, and healthcare benefit management stocks and ranked them by the number of hedge funds that had bought the shares in Q3 2024.
For these stocks, we also mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds invest in? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)
Number of Hedge Fund Holders In Q3 2024: 31
Date of Cramer’s Comments: 9-13-24
Performance Since Then: -39%
Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) is a pharmaceutical company that is quite stable since it’s profitable. Key to the firm’s hypothesis is its Eyelea drug which treats age-related macular degeneration. The second half of the year has been tumultuous for Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)’s shares. The stock slipped by 9% in October when a higher dose variant of Eyelea missed sales estimates. Conversely, the stock posted a modest 2% gain in mid-December when a patent lawsuit for a COVID-19 treatment was settled in court. Here’s what Cramer said in September:
“On Monday, Regeneron is presenting. That’s a biotech company holding an analyst meeting at the European Society for Medical Oncology annual meeting, where they’ll showcase their oncology portfolio, which is beautiful, including forms to treat advanced melanoma and non-small cell lung cancer. These are important drugs that have helped diversify Regeneron’s business, but I’m still focused on the company’s obesity drug candidate.
“When I was at the JP Morgan Healthcare Conference in San Francisco earlier this year, I spoke with Regeneron CEO Len Schleifer, an old friend of the show who was one of our first guests. He was confident that his company might have a weight loss drug that only attacks fat, not muscle. That’s huge, as people who take GLP-1s experience muscle atrophy unless they work out pretty consistently. I think this drug would be an instant success if it can get through the clinical trials. Right now, it’s too early in the process to take anything as gospel.”
9. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Number of Hedge Fund Holders In Q3 2024: 33
Date of Cramer’s Comments: 8-15-24
Performance Since Then: -13.54%
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a pharmaceutical retailer. The second half of the year hasn’t been kind to the firm as its shares have lost 9%. Walgreens Boots Alliance, Inc. (NASDAQ:WBA) has entered the current period of uncertainty about healthcare middlemen with several headwinds already present. The firm has struggled with reimbursements and constrained consumer spending, which have led it to close down 1,200 stores and generated speculation about a potential takeover. The decision to shut 1,200 stores sent Walgreens Boots Alliance, Inc. (NASDAQ:WBA)’s stock soaring by 23% in mid-October and after shedding all these gains the shares jumped by 17% in December on reports of the firm being taken private. Here’s what Cramer said in August:
“Roz Brewer was being run into the ground, but I can’t blame her. Walgreens has been a slow-motion train wreck for ages. I thought it was doomed from the day Amazon put same-day delivery into motion for thousands of things you used to get at the drugstore. The damage may be so great that a turnaround is impossible. I believe in Tim Wentworth—if there’s a possibility of a turnaround, he will do it.”
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