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.”
8. Cardinal Health, Inc. (NYSE:CAH)
Number of Hedge Fund Holders In Q3 2024: 40
Date of Cramer’s Comments: 8-20-24
Performance Since Then: 8.70%
Cardinal Health, Inc. (NYSE:CAH) is a medical products firm that sells surgical equipment and other supplies. While it has struggled amidst a broader healthcare spending slowdown in 2024, the firm has managed to stem its losses by focusing on the specialty drug market. These drugs are pricier than standard medicines, and Cardinal Health, Inc. (NYSE:CAH)’s $1.12 billion acquisition of Oncology Network has also expanded its presence in the industry. Cardinal Health, Inc. (NYSE:CAH)’s shares soared by 6.7% in November after the firm lifted its profit-per-share full-year guidance to $7.75 to $7.90 from an earlier $7.55 to $7.70.They gained an added 12% after the election and the firm’s new acquisitions to expand its presence in the diabetes and gastroenterology market. Here’s what Cramer said in August:
“A while ago, we checked in with Cardinal Health, one of the three big drug distributors in America—some people call them pharmaceutical middlemen, but they’re more than that. I thought they told a pretty good story, frankly. However, since then, we learned that Cardinal’s second-largest customer, OptumRx, wouldn’t be renewing their contract, which initially sent the stock down 5% in a single session. That’s suboptimal. However, when the company reported last week, they delivered an 11-cent earnings beat on a $1.73 basis, with revenue significantly higher than expected, up 12% year-over-year. Even better, management raised the earnings forecast for the 2025 fiscal year, which just started for them. I think that’s pretty impressive.”
7. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
Number of Hedge Fund Holders In Q3 2024: 55
Date of Cramer’s Comments: 8-28-24
Performance Since Then: -17.85%
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a biotechnology company that derives more than 90% of its sales through selling cystic fibrosis drugs. It also gained prominence earlier this year through its CASGEVY treatment which became the world’s first gene-editing-based treatment for Sickle Cell Disease. However, the latter half of 2024 has been nothing short of devastating for Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)’s shares. The stock sank by 11% in December after the firm’s highly hyped non-addictive painkiller thought to have the potential to replace opioids failed to meet objectives. Here’s what Cramer said about Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) in August:
“I think Vertex is great. Look, its fibrosis franchise is incredible, and a terrible disease. But I also like the fact that what they’re doing in terms of opiates—look, this is a great company. No one ever talks about it. We’ve had them on. I think that they’re brilliant. Okay, per period. Down story.”
6. McKesson Corporation (NYSE:MCK)
Number of Hedge Fund Holders In Q3 2024: 57
Date of Cramer’s Comments: 10-01-24/10-02-24
Performance Since Then: 14.6%
McKesson Corporation (NYSE:MCK) is one of the biggest pharmacy benefits managers in the US. It is a classic stock that is one of the middlemen that President-elect Trump has vowed to take on. During the second half, McKesson Corporation (NYSE:MCK)’s stock has been driven by the sentiment surrounding the middlemen and its earnings. After struggling with pharmacy revenue in Q2, the stock soared by 16% in November when McKesson Corporation (NYSE:MCK) raised full-year profit per share guidance to $32.40 to $33 per share, from an earlier $31.75 and $32.55. However, the shares have lost 9% since late November due to the aforementioned reasons. Here’s what Cramer said in October:
“It’s time to buy it. You know they’re not just a middleman. They do a lot of good things and I think the stock has had way too big a hit. It’s now selling at a below-market multiple. I’m ready to start buying. Don’t buy all at once. Buy in a pyramid style.”
5. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders In Q3 2024: 63
Date of Cramer’s Comments: 8-22-24
Performance Since Then: 0.95%
Abbott Laboratories (NYSE:ABT) is one of the most well-known and largest drug manufacturers in the world. However, global economic problems have hurt the firm in 2024. US healthcare spending slowdown and global economic troubles have hampered Abbott Laboratories (NYSE:ABT)’s diagnostic equipment and nutritional businesses. Consequently, the stock is up by a modest 3% year-to-date. However, H2 has come with some catalysts, such as in November when Abbott Laboratories (NYSE:ABT)’s shares rose by 4.6% after it was cleared in a lawsuit surrounding baby powder. Here’s what Cramer had to say in August:
“Okay, I got the whole lawsuit thing down. We’ve got one more lawsuit that’s done in September. It’s going to be in the same jurisdiction as the bad one where they got the very big verdict. I think that verdict is going to be brought down. I think they’ll lose the next ones too, but we’re holding on to it for the trust. Why? Because Abbott’s a great company. In the end, these are product liability suits—they are not mass tort actions like J&J. I think we’ll come out ahead of the game. They’ve got four great product lines that are selling fabulously. The market is still too overbought, people. We got too hopeful, so now we might need to take a brief respite. There’s nothing wrong with that—maybe little buyers’ remorse.”
4. HCA Healthcare, Inc. (NYSE:HCA)
Number of Hedge Fund Holders In Q3 2024: 66
Date of Cramer’s Comments: 09-05-24
Performance Since Then: 24.8%
HCA Healthcare, Inc. (NYSE:HCA) is one of the biggest hospital managers in America. It operates inpatient and outpatient care facilities, and as a result, is dependent to a large extent on the US government’s healthcare benefit programs for its revenue. HCA Healthcare, Inc. (NYSE:HCA)’s shares dropped by 10% in October after Hurricane Helene reduced its revenue by $50 million and led to a Q3 EPS miss by seven cents. The 10% share price drop erased the gains that the firm had made in the second half. Here’s what Cramer said about HCA Healthcare, Inc. (NYSE:HCA) in September:
“In the interest of keeping things fresh, let me give you a new idea, one we talked about not that long ago: HCA Healthcare. That’s the big hospital chain. HCA has been making a mint from the major uptick in patients coming in for non-urgent procedures. Incredibly, there’s still a huge backlog of people who postponed going to the hospital during the pandemic.
“When I think in football terms, HCA reminds me of Detroit Lions tight end Sam LaPorta, the first intentional pick of the *Ski Daddies*, my fantasy team in Tuesday night’s draft. Yes, I was on autopilot for the first round. LaPorta burst onto the scene with an incredible rookie campaign last year, accumulating nearly 900 yards and a whopping 10 touchdowns. No other tight end had more than six. That’s how he ended up as the best tight end last season, even outperforming Taylor Swift’s boyfriend!
“But both LaPorta and HCA still somehow feel undervalued. Despite HCA being up 47% year-to-date, the stock still sells for less than 18 times earnings, offering a huge discount to the S&P 500. Meanwhile, LaPorta still isn’t a household name, despite his huge first season. Two good options with high floors and lots of upside.”
3. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders In Q3 2024: 80
Date of Cramer’s Comments: 8-16-24
Performance Since Then: -6.5%
Pfizer Inc. (NYSE:PFE) is a global pharmaceutical giant that has struggled with high debt and activist investor pressure in 2024. The firm had $61.5 billion in long-term debt as of 2023 end, and its CEO is currently exploring the sale of its hospital drug unit to raise cash and reduce leverage (news that saw the stock drop by 14% over the next couple of days). Pfizer Inc. (NYSE:PFE)’s shares will be driven by cost-cutting through which the firm aims to deliver at least $4 billion in savings in 2024. It is also aggressively touting its COVID treatment Paxlovid as a cash cost, particularly as the drug brought in $2.7 billion in Q3 sales. Here’s what Cramer said about Pfizer Inc. (NYSE:PFE) in August:
“Pfizer has a 5% yield and some interesting drugs, but it’s a bit like when you trade for someone who costs $60 million and they end up performing like a penny stock.”
2. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders In Q3 2024: 106
Date of Cramer’s Comments: 8-20-24
Performance Since Then: -18.28%
Eli Lilly and Company (NYSE:LLY) has been the star of the pharmaceutical industry over the past year or so due to its weight loss drugs. However, with the weight loss drug industry now facing entry of low-cost options, the stock has been under pressure. Year-to-date, Eli Lilly and Company (NYSE:LLY)’s shares are up by 31% but they have lost 15% over the past six months. Within the six-month performance, two dips are particularly notable. One of these saw the stock drop by 14% in the first week of November after Eli Lilly and Company (NYSE:LLY)’s Mounjaro and Zepbound sales of $3.11 billion and $1.26 billion in Q3 fell short of analyst estimates of $4.20 billion and $1.69 billion. Here’s what Cramer said in August:
“Eli Lilly (LLY) has announced that its novel weight loss and diabetes drug can reduce the risk of developing type 2 diabetes by 94%—and that’s not in the general population but among pre-diabetic adults who are already prone to it. Add this drug’s ability to aid in weight loss, and we’re likely moving toward a future where people are less concerned about diet and exercise. After all, what they’re doing now isn’t working as well as Lilly’s tirzepatide.
“People often lack the discipline and willpower to maintain diets and workout regimens, which contributes to obesity and type 2 diabetes—a serious condition we hear so much about. While we’ve heard about revolutionary GLP-1 drugs for some time, there was always skepticism about their long-term performance. However, the results from the 176-week trial on Lilly’s tirzepatide are game-changing in the fight against diabetes. The average patient lost 23% of their body weight, which makes it more likely that the FDA will approve the drug for widespread use.
“With no real alternative, it’s hard to see how insurance companies can avoid covering these GLP-1 drugs. I feel more optimistic about this after David Ricks, CEO of Eli Lilly, mentioned this morning on Squawk on the Street that the drug will save the healthcare system a lot of money. The initial question was whether these drugs, including tirzepatide—a dual-acting GLP-GIP inhibitor—not only keep you thinner but also healthier. We’re beginning to see that they do. Even though the federal government doesn’t cover these drugs, and many employers don’t either, they should. This will save money for our country in the long term and promote healthier, longer lives.
“I’ve been a huge supporter of Eli Lilly for ages, and it remains a major position in the Trust. This news will likely attract new believers. David’s assurance that they’re working on various formulations—such as pill forms, monthly shots, and multi-dose injectables—shows their commitment. They’re investing $18 billion to build manufacturing facilities for these drugs, a feat few other companies can afford. While competitors may have something up their sleeves, right now, Lilly is the clear leader, with Novo Nordisk in second place. The rest are still stuck in the FDA approval process, which could take years.
“Lilly started this journey back in 2016, and the competition is nowhere near catching up. There’s a significant misunderstanding about what this drug can achieve. It’s not just for weight loss and diabetes; it will be prescribed for conditions like congestive heart failure, liver disease, hypertension, and more. It might even become a treatment for alcoholism and sleep apnea. That’s why I believe Eli Lilly, currently worth $92 billion, could eventually join the trillion-dollar club.
“Everyone is searching for a drug company that can challenge Lilly, but Lilly’s deep moat and protection from competition make it hard to beat. Although the stock didn’t close above its previous highs today—potentially signaling a double top—I urge you to think bigger. One day, we’ll recognize that tens of millions of people have been freed from the constraints of diet and exercise regimens, thanks to Eli Lilly.”
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders In Q3 2024: 112
Date of Cramer’s Comments: 09-05-24
Performance Since Then: -14.7%
UnitedHealth Group Incorporated (NYSE:UNH) is one of the biggest healthcare benefits management firms in the US. The second half of 2024 hasn’t been kind to the shares. December, in particular, has been a rough month since the stock has lost 16.9% so far. The sell-off kicked off after it guided full-year profit per share to sit between $29.50 and $30.00 which was below analyst estimates of $29.92. Investors were also spooked by UnitedHealth Group Incorporated (NYSE:UNH) ‘s 2025 medical cost ratio guidance of 86% to 87%. Its stock has also suffered after President-elect Trump’s vow to take on the healthcare middlemen. Here’s what Cramer said in September:
“I am bullish on UNH. Last year, I got bullish on Humana, which was a mistake. The better one is UNH. You always have to go with the best of breed. I will not make that mistake again. This stock is very close to its high and could pull back, but I’ve got to tell you, it is best of breed and a winner.”
UNH was a semiconductor stock Cramer mentioned in August. While we acknowledge the potential of UNH as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than UNH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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