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Richard Kahn
12/15/2016 5:46:20 PM
jeffrey E. [jeeyacation@gmail.com]
Fwd: US Healthcare Year Ahead...Buy ACAD, AGN, ANTM, CELG, CVS, DHR, EW, EVHC, RARE, REGN, WBA
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attached are equity healthcare ideas
Richard Kahn
HBRK Associates Inc.
575 Lexington Avenue 4th Floor
New York, NY 10022
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Begin forwarded message:
From: "Ens, Amanda"
Subject: US Healthcare Year Ahead...Buy ACAD, AGN, ANTM, CELG, CVS, DHR, EW, EVHC, RARE, REGN, WBA
Date: December 15, 2016 at 10:59:39 AM EST
To: "Rich Kahn" __________
Reply-To: "Ens, Amanda"
The US team is out with their 2017 Year Ahead this morning (link) running through ALL sub-sectors with each analysts
top pick into the new year.
op Picks — ACAD, AGN, ANTM, CELG, CVS, DHR, EW, EVHC, RARE, REGN, WBA
Washington DC Backdrop
Given the clean sweep by the GOP & uncertainty around the ACA, key attention is paid by Andy Bressler to a review of
the various scenarios that could play out early next year. With a repeal likely to happen well before a replace
(essentially via the Budget Reconciliation process in Jan/Feb), Andy notes this is likely to include a repeal of both
health insurance exchange subsidies & a phase-down of Medicaid expansion funding (albeit with a two or three year
transition period).
He also expects a repeal of many of the larger HC related taxes in the ACA, including the HIX ($14.3bn in 2018),
Medtech Tax (2.3%), pharma industry tax ($4.1bn in 2018) & Cadillac tax (effective 2020).
As for the views by analysts...
Biotech (+) — believe sector will outperform largely as pricing risk has diminished (although will remain in pockets) but
pipelines/growth remains. Ying's top picks are CELG & REGN; Tazeen's top picks are kCAD & RARE.
Spec Pharma (-) — headwinds remain w/ Sumant's top pick AGN given lower risk to reimbursement pressures & an
underappreciated pipeline. Leverage & CF remain the key focus for investors.
Tools/Animal Health (=) — Derik notes more "headline" than "real" risks from policy which will create opportunities for a
group growing MSD, although valuations remain above peers. (US 1 name) top pick, also A, ZTS in Animal
Health, in Diagnostics & in Services.
Medtech (=) — Hopkins' expects a mixed bag in 2017 w/ stocks trading close to 5yr valuation lows; EW top pick given
best growth / purest innovation story.
HOUSE OVERSIGHT 014523
Facilities (-) — Fischbeck notes that uncertainty will remain an overhang for hospitals as repeal/replace a negative for
the group (est losing 2-3mm Medicaid lives & 2-3mm exchange lives would be a 1-2% EBITDA hit on avg). Focus on
company-specific stories like
MCOs (+) — Fischbeck generally +ve under Trump (especially around MA given historical support from GOP) w/
tailwinds from corporate tax & rising rates. top pick in given valuation & tailwinds.
Distribution/Tech (=) — Valiquette prefers pharmacies ,,,'VS/WBA given benefits from decelerating generic prices
(which will remain an overhang for Distributors). HHS appointment a —ve for HCIT.
Daniel Lundquist
Healthcare Specialist Sales
Global Equities
Bank of America Merrill Lynch
One Bryant Park I New York, 10036 I United States
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