What Happened?

A number of healthcare stocks fell in the afternoon session after several negative developments weighed on the sector. Weakness in managed care providers was a significant factor, with companies like Elevance Health and Humana seeing declines due to an analyst downgrade and a lost lawsuit regarding Medicare bonus payments, respectively. 

Additionally, some pharmaceutical and biotech companies experienced sharp drops following unfavorable news; for instance, Sarepta Therapeutics plunged after a report indicated another patient death tied to its experimental gene therapy, and GSK's blood cancer drug dosage was voted against by the FDA advisory committee. Broader market sentiment, including concerns about rising costs and inadequate pricing for 2025 plans among health insurers, also contributed to the downward pressure on healthcare equities.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Drug Development Inputs & Services company Repligen (NASDAQ: RGEN) fell 7%. Is now the time to buy Repligen? Access our full analysis report here, it’s free.
• Research Tools & Consumables company Bruker (NASDAQ: BRKR) fell 4.7%. Is now the time to buy Bruker? Access our full analysis report here, it’s free.
• Drug Development Inputs & Services company Fortrea (NASDAQ: FTRE) fell 9.2%. Is now the time to buy Fortrea? Access our full analysis report here, it’s free.
• Drug Development Inputs & Services company Azenta (NASDAQ: AZTA) fell 3.7%. Is now the time to buy Azenta? Access our full analysis report here, it’s free.
• Therapeutics company Biogen (NASDAQ: BIIB) fell 3%. Is now the time to buy Biogen? Access our full analysis report here, it’s free.

Zooming In On Fortrea (FTRE)

Fortrea’s shares are extremely volatile and have had 52 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 7 days ago when the stock dropped 4.5% on the news that Mizuho lowered its price target on the shares ahead of the company's second-quarter earnings report. The investment bank reduced its price target, which is an analyst's projection of a stock's future price, to $7 from a previous $8, while keeping a "Neutral" rating on the stock. This adjustment signals a slightly more cautious outlook from the analyst on the company's valuation. 

Fortrea is down 75.4% since the beginning of the year, and at $4.59 per share, it is trading 83.5% below its 52-week high of $27.88 from July 2024. Investors who bought $1,000 worth of Fortrea’s shares at the IPO in June 2023 would now be looking at an investment worth $152.65.

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