11 Oversold Healthcare Stocks To Buy Right Now

Published on March 13, 2024 at 8:17 am by Fatima Farooq in Hedge Funds, News

In this article, we will be taking a look at 11 oversold healthcare stocks to buy right now. To skip our detailed analysis of the healthcare sector, you can go directly to see the 5 Oversold Healthcare Stocks To Buy Right Now.

The Healthcare Sector: The New 2024 Idea?

The healthcare sector has been popular among investors for some time now, but it is starting to become the new “2024 idea” for investing portfolios because of its performance so far. Biotechnology companies, in particular, have been seen to have a “massive breakout” in February, according to BTIG’s Chief Market Technician, Jonathan Krinsky, who joined CNBC’s “Closing Bell” to discuss the potential upside for the healthcare sector this year on February 27. Here are some of his comments:

“It [healthcare] was our top pick in December, coming into the year. I think it started with the mega caps, Eli Lilly, that kind of trade. Now we’re seeing a broadening. If you look at year-to-date performance on an equal weight basis, healthcare is the best performing sector on an equal weight basis. So it is brought underneath, and you know, if you compare it to technology it’s not had the big hockey stick moves right now, so I think there’s still some runway to go.”

Considering Krinsky’s comments, it is unsurprising that many are now looking at the healthcare sector this year as a viable and potentially attractive investment opportunity. Though the sector may lack some of the excitement associated with the technology sector, and artificial intelligence stocks in particular, healthcare is now beginning to take the stage as an alluring investment space with immense room to grow in profitability and upside potential. This is especially the case if one is looking to invest in top performers in the healthcare sector, such as Johnson & Johnson (NYSE:JNJ), Bristol-Myers Squibb Company (NYSE:BMY), and AbbVie Inc. (NYSE:ABBV).

Obesity and Weight Loss Drugs: A Newly Popular Area in Healthcare

One of the most popular areas within the healthcare sector today is that of obesity and weight loss drugs. A major player in this area is the mega-cap Eli Lilly and Company (NYSE:LLY), mentioned by Krinsky on CNBC’s “Closing Bell.” This company has been working tirelessly in the past to highlight obesity as a medical condition that requires proper attention and diagnosis alongside treatment. Dr. Angela Fitch, a Chief Medical Officer at Knownwell and President of the Obesity Medicine Association, joined CNBC’s “Squawk Box” on March 8 to discuss Eli Lilly and Company’s (NYSE:LLY) new obesity drug ads. Here are some of her observations on the matter:

“Obesity as a chronic disease has not gotten the attention it deserves. It’s the biggest epidemic in our country and the world actually right now, and it’s just nice to see this sort of public service annoucement recognizing the criticality of treating obesity today as a chronic disease.”

According to Dr. Fitch, over a hundred million people in the US qualify for treatment when it comes to the disease of obesity, a figure that underscores the pertinence of this issue, particularly in the US, and highlights the existence of a massive market for obesity and weight loss drugs from the perspective of companies marketing these products. A contentious point up for debate when it comes to these drugs, though, is their highly expensive prices. Healthcare companies charge massive amounts for granting access to these drugs, which may serve them well by way of profitability and may be an attractive point from an investment point of view. Still, the US government has been attempting to regulate the prices of these drugs for the benefit of the regular consumer who may be in dire need of obesity medication but unable to afford it. Whatever the outcome of the pricing debate may be, it is undeniable that healthcare companies are beginning to attract attention this year. As a result, it may be a good idea to keep an eye on which names in this sector are oversold stocks or overbought stocks. We have thus compiled a list of oversold stocks in the healthcare sector. These include some cheap healthcare stocks and other healthcare stocks to consider investing in.

11 Oversold Healthcare Stocks To Buy Right Now

Scientist in a lab working on a research project, focusing on biotechnology and healthcare advancements.

Our Methodology

We used the Relative Strength Index (RSI) indicator to pick oversold stocks in the healthcare sector for our list. The RSI indicator is a momentum indicator used in the technical analysis of stocks by measuring the speed and magnitude of a security’s recent price changes to evaluate whether the price of that security is overvalued or undervalued. Stocks with RSI values of over 70 are traditionally considered overbought, while those with RSI values under 30 are oversold. We used a stock screener to find healthcare stocks with RSI values under 30 and then ranked them based on this metric, from the highest to the lowest RSI value. We also mentioned the number of hedge funds holding stakes in each stock, using Insider Monkey’s hedge fund data for the fourth quarter. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by over 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.

Oversold Healthcare Stocks To Buy Right Now

11. 10x Genomics, Inc. (NASDAQ:TXG)

Number of Hedge Fund Holders: 30

14-day RSI as of March 12: 30

10x Genomics, Inc. (NASDAQ:TXG) is a life sciences tools and services company based in Pleasanton, California. The company develops and sells instruments, consumables, and software for analyzing biological systems across the globe.

On February 16, analysts at Stifel maintained a Buy rating and a $63 price target on 10x Genomics, Inc. (NASDAQ:TXG).

In the fourth quarter, 30 hedge funds were long 10x Genomics, Inc. (NASDAQ:TXG), with a total stake value of $572.1 million.

Baron Funds mentioned 10x Genomics, Inc. (NASDAQ:TXG) in its third-quarter 2023 investor letter:

“We initiated a position in 10x Genomics, Inc. (NASDAQ:TXG), a company that sells innovative instruments and reagents for life sciences research. The company’s first platform, the Chromium, is dominant within the single-cell space. The Chromium utilizes advanced microfluidics to separate a sample into individual cells. Each cell is enveloped in its own droplet, where an individual reaction occurs to detect the expression profile of that cell. This occurs in parallel across tens of thousands of droplets, enabling high-throughput and granular characterization of a sample. 10x Genomics’ second platform is the Visium platform for spatial analysis. Visium employs a slide with many small dots (55 microns in diameter), each of which has a unique barcode. The barcodes are read by next-generation sequencing equipment. This enables researchers to detect expression patterns (genetic behavior) across geographic regions of a tissue sample. Finally, the company is launching its third major platform, the Xenium for in-situ analysis. The in-situ platform allows researchers to visualize biomarkers of interest right on the tissue slide, in real time. The images are processed on-instrument versus Visium, which requires barcodes that a separate sequencer reads.

Our conviction in 10x Genomics is driven by multiple growth drivers over the next several years. First, for the single-cell platform, the company has a new kit called Flex that enables sample multiplexing and working with FFPE (preserved) samples. We think this opens up translational studies that rely on archival samples. This marks an opportunity to expand into biopharmaceuticals (whereas historically the company has been predominantly conducting basic research). Second, we think there is upside from the new product cycle with the in-situ Xenium. We believe the platform is differentiated by its throughput, paired with a panel approach that allows customers to add customization to their research projects. In the near term,10X Genomics’ margins may be pressured by the bolus of Xenium boxes being placed, which are generally, lower-margin razors. This will eventually lead to a stream of consumables (razor blades) sales at much higher margins. We like 10x Genomics as a high-quality life science research company with multiple shots on goal. The company has a strong balance sheet with $400 million in cash and no debt, and with visibility to FCF breakeven in the near term. We see 10x Genomics as a consistent double-digit grower, with over 80% of revenues coming from high-margin and recurring consumables, roughly 70% gross margins, and a path to over 30% EBITDA margins longer term.”

While being part of our oversold stocks list, 10x Genomics, Inc. (NASDAQ:TXG) may be an attractive healthcare stock to buy, like Johnson & Johnson (NYSE:JNJ), Bristol-Myers Squibb Company (NYSE:BMY), and AbbVie Inc. (NYSE:ABBV).

10. MaxCyte Inc. (LON:MXCT)

Number of Hedge Fund Holders: 14

14-day RSI as of March 12: 29.75

There were 14 hedge funds long MaxCyte Inc. (LON:MXCT) in the fourth quarter, with a total stake value of $68.9 million.

MaxCyte Inc. (LON:MXCT) is another life sciences tools and services company on our list of oversold stocks. The company is based in Rockville, Maryland. It discovers, develops, and commercializes next-generation cell therapies.

Cadian Capital was the largest shareholder in MaxCyte Inc. (LON:MXCT) at the end of the fourth quarter, holding 5.6 million shares in the company.

9. Seres Therapeutics, Inc. (NASDAQ:MCRB)

Number of Hedge Fund Holders: 20

14-day RSI as of March 12: 29.58

An Outperform rating and a $5 price target were maintained on Seres Therapeutics, Inc. (NASDAQ:MCRB) on March 6 by analysts at Oppenheimer.

Seres Therapeutics, Inc. (NASDAQ:MCRB) is a biotechnology company on our list of oversold stocks. The company develops microbiome therapeutics to treat the modulation of the colonic microbiome.

In total, 20 hedge funds were long Seres Therapeutics, Inc. (NASDAQ:MCRB) in the fourth quarter, with a total stake value of $22.3 million.

8. Integra Lifesciences Holdings Corporation (NASDAQ:IART)

Number of Hedge Fund Holders: 29

14-day RSI as of March 12: 29.56

Holding 53.7 million shares in the company, Highbridge Capital Management was the largest shareholder in Integra Lifesciences Holdings Corporation (NASDAQ:IART) at the end of the fourth quarter.

Integra Lifesciences Holdings Corporation (NASDAQ:IART) is a healthcare equipment company on our list of oversold stocks. The company manufactures and sells surgical instruments, neurosurgical products, and wound care products for use in neurosurgery, neurocritical care, and otolaryngology.

JMP Securities analysts maintained a Market Outperform rating and a $49 price target on Integra Lifesciences Holdings Corporation (NASDAQ:IART) on February 29.

We saw 29 hedge funds long Integra Lifesciences Holdings Corporation (NASDAQ:IART) in the fourth quarter, with a total stake value of $249.4 million.

7. Axsome Therapeutics, Inc. (NASDAQ:AXSM)

Number of Hedge Fund Holders: 31

14-day RSI as of March 12: 29.32

Axsome Therapeutics, Inc. (NASDAQ:AXSM) was spotted in the 13F holdings of 31 hedge funds in the fourth quarter, with a total stake value of $968.4 million.

As of March 4, HC Wainwright & Co. analysts maintain a Buy rating and a $180 price target on Axsome Therapeutics, Inc. (NASDAQ:AXSM).

Axsome Therapeutics, Inc. (NASDAQ:AXSM) is a pharmaceutical company based in New York on our list of oversold stocks. It develops novel therapies for central nervous system disorders in the US.

6. PetMed Express, Inc. (NASDAQ:PETS)

Number of Hedge Fund Holders: 15

14-day RSI as of March 12: 29.05

Driehaus Capital was the largest shareholder in PetMed Express, Inc. (NASDAQ:PETS) at the end of the fourth quarter, holding 732,155 shares in the company.

PetMed Express, Inc. (NASDAQ:PETS) operates as a pet pharmacy in the US and is based in Delray Beach, Florida. The company markets prescription and non-prescription pet medications, health products, and other animal supplies.

PetMed Express, Inc. (NASDAQ:PETS) was seen in the portfolios of 15 hedge funds in the fourth quarter, with a total stake value of $34.1 million.

Despite being on our list of oversold stocks, PetMed Express, Inc. (NASDAQ:PETS) may be a good healthcare stock to buy, just like Johnson & Johnson (NYSE:JNJ), Bristol-Myers Squibb Company (NYSE:BMY), and AbbVie Inc. (NYSE:ABBV).

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