Jazz Pharmaceuticals is riding a health care wave this month as investors remain concerned that we are getting close to a recession. Many investors consider the health care sector, especially pharmaceuticals, as somewhat recession-resistant. Everyone needs health care in good times and in bad times. Jazz is one of the IBD 50 Stock to Watch.
Jazz develops therapeutic drugs in areas such as narcolepsy, cancer, pain management and psychiatry. Right now, the stock is forming a cup-with-handle base with a buy point of 170.08, according to MarketSmith. However, the handle is 19% deep, which is flawed. For that reason, investors may want to call the handle a base of its own. The buy point is the same with either interpretation.
Its Relative Strength Rating is rising and is now at 91. Over the past week its shares have surged above their 50-day moving average.
The health care sector is the best-performing sector this month of the 11 S&P sectors. The Health Care Sector ETF has lost only 2.8%, versus the S&P 500's decline of 7.8%. The iShares U.S. Pharmaceuticals ETF has performed even better, down just 1.6% this month.
Jazz Ranks Highly Among Pharma Stocks
Jazz Pharmaceuticals is ranked No. 5 in IBD's ethical drugs industry group, behind Big Pharma companies like Merck, Pfizer and Bristol Myers Squibb. The industry group is ranked a strong No. 28 out of 197 industry groups, according to Stock Checkup.
The company has earned an IBD Composite Rating of 95, of a best-possible 99, based on its fundamental and technical strength. But it has a low EPS Rating of 68, in part because it has a three-year EPS growth rate of just 6%. Also it missed analyst estimates of both earnings and sales when it reported first-quarter earnings on May 4.
Analysts surveyed by FactSet expect it to earn $4.19 a share on sales of $901 billion in the second quarter. The company has not announced when it will release its quarterly results.
One of Jazz's most controversial products is Epidiolex, a drug that contains CBD, one of the active ingredients in marijuana. The FDA approved the drug to treat people with epilepsy, but it hasn't approved it for other uses or for food or dietary supplements.
The investment bank UBS began coverage of Jazz with an initial buy rating on the stock on June 14.
Follow Michael Molinski on Twitter @IMmolinski
