RIP to These 3 Dying Medical Stocks
The high inflation is leading to rising healthcare spending, so it could be wise to sell fundamentally weak medical stocks, Pacific Biosciences (PACB), DermTech (DMTK), and Genetic Technologies (GENE), before...
High inflation is leading to higher healthcare spending. It might be wise to sell fundamentally poor medical stocks such as Pacific Biosciences, DermTech, and Genetic Technologies (GENE) before things get worse. Continue reading ....
Investors expect the Fed to become more dovish following the banking crisis. However, rising oil prices could mean that inflation remains high for the foreseeable future. High inflation is pushing healthcare spending higher every day. It might be prudent to avoid fundamentally weak medical stocks Pacific Biosciences of California, Inc., DermTech, Inc., and Genetic Technologies Limited (GENE).
Inflation is making the healthcare industry more vulnerable. The healthcare industry now faces a new set, after two years of fighting the effects of COVID-19 and the fallout from pandemic.
General inflation has been outpaced by medical inflation. WTW's 2023 Global Medical Trends Survey found that medical expenses will rise 10% due to increased healthcare costs and widespread inflation. This compares with increases of 8.8% and 8.2% in 2022, respectively.
Let's dive deeper into the basics of PACB and DMTK to see what makes them preventable.
Pacific Biosciences of California, Inc.
PACB develops, produces, and designs sequencing technologies that address genetically complex issues. The company sells sequencing equipment, consumable goods, such as single-molecule-real-time (SMRT), cells, and a variety reagent kits for different workflows.
PACB's trailing-12 month gross profit margin of 41.7%, is 25.4% less than the industry average 55.9%. Also, its trailing-12 month EBITDA margin is negative 226.6% compared to the industry average 2.7%.
PACB's fiscal fourth quarter ended December 31, 2022 saw its total revenue decrease 24.1% year over year to $27.35million. Its gross profit fell 69.3% to $5.14million, year-over-year. Net loss and loss per share fell 21.7% to $5.14 million, and 19.4% respectively year-over-year.
Analysts predict that the company's EPS will be negative $1.24 for fiscal 2023 and $1.06 for fiscal 2024. In three of its four trailing quarters, it failed to exceed the consensus EPS estimates.
PACB's weak foundations are reflected by its POWR Ratings. The overall rating for PACB is F. This is equivalent to a Strong Sell according to our proprietary rating system. The POWR Ratings are calculated using 118 factors. Each factor is weighted to the optimal degree.
It is rated D for Quality, Value, Momentum and Stability. It is #54 among 55 stocks in the D-rated Medical/Diagnostics/Research sector. Click here for more information about PACB Growth.
DermTech, Inc. (DMTK)
DMTK is a non-invasive molecular diagnostic company in the United States that creates and sells cutting edge genomics tests. These tests can help with the diagnosis and treatment of a range of skin conditions, including inflammatory diseases and skin cancer.
DMTK's trailing 12-month gross profit margin is 4.5%, which is 92% less than the industry average 55.9%. The industry average is negative 31.7%. DMTK's trailing-12 month ROA of negative 57.7% is lower than its trailing-12-month ROTA. Its trailing-12-month ROCE is negative 64.46%, compared to the industry average negative 40.33%.
DMTK's fourth quarter ended December 31, 2022 saw a 5.4% decrease in total revenue to $2.99million. The net loss of the company increased 8.3% to $28.22million from the previous year. Its loss per share was $0.93, an increase of 5.7% year over year.
Analysts predict that DMTK's EPS will be negative 3.50 for fiscal 2023, and negative 3.01. Over the past nine months, the stock has fallen 36.4% to close at $3.79.
DMTK's POWR Ratings reflect this grim outlook. According to our proprietary rating system, the stock is rated F overall. This translates into a Strong Sell.
It is rated F for Stability and D for Momentum, Quality. It is the last-ranked company in the same industry. Click here to see the DMTK rating for Sentiment, Growth, Value and Value.
Genetic Technologies Limited (GENE).
GENE is a molecular diagnostics company that offers tools for risk assessment, predictive genetic testing, and other services to help clinicians manage patients' health in the United States, Canada and Europe. It operates in two parts: GeneType/Corporate or EasyDNA.
GENE's 12-month trailing EBITDA margin of -80.5% is lower than the industry average of 2.7%. GENE's ROCE of negative 55.5% is lower than the industry average of -31.7%. Its ROCE is also negative at 57.2%, compared to the industry average negative 40.33%.
GENE's 12-month trailing Capex/Sales of 0.18% compares with the industry average of 4.588%. Over the past 12 months, cash outflows from operations were 5.21 million. The stock lost 12.8% in the past month, closing the last trading session at $1.09.
GENE's POWR Ratings are indicative of this poor outlook. Overall, it has a rating of F. This is equivalent to a Strong Sell according to our proprietary rating system. It is rated F for stability and D for value, momentum, and quality. It is #53 in the same industry.
We have given GENE ratings for Sentiment and Growth, in addition to what I have already stated. All GENE ratings are available here.
What should you do next?
This special report is your chance to get it:
These stocks have the right stuff to be big winners even in this tough stock market.
Because they are all low-priced companies that offer the greatest upside potential in today’s volatile markets.
They are also all Top Buy Rated Stocks according to our highly regarded POWR Ratings system. Their key areas of growth, sentiment, and momentum are outstanding.
Click the button below to view these exciting stocks that could double or more over the next year.
Premarket trading Monday saw PACB shares fall $0.06 (-0.55%). PACB shares have gained 33.25% year-to-date compared to a 6.78% increase in benchmark S&P 500 during the same period.
Shweta Kumari is the author
Shweta's deep interest in quantitative analysis and financial research led her to become an investment analyst. She applies her knowledge to assist retail investors in making educated investment decisions.