Goldman Sachs Adds Amgen, UnitedHealth, Dentsply Sirona To Conviction List

After a year of sector underperformance, several factors are coalescing to make 2020 a better year for the health care sector, Goldman Sachs said Monday as it added three stocks to its conviction list.

The Analyst

Asad Haider added Amgen, Inc. AMGN, UnitedHealth Group Inc UNH and Dentsply Sirona Inc. XRAY to the firm’s Americas Conviction List.

Goldman has Buy ratings on all three stocks and a $270 price target on Amgen, a $330 price target on UnitedHealth and $66 price target on Dentsply Sirona.

Takeways On Amgen, UnitedHealth, Dentsply Sirona

Overall, Haider is more bullish on health care stocks generally and said he expects a rebound from a down year.

A strong biotech innovation cycle is starting,and there’s a sense that any near-term aggressive government action is unlikely, with policymakers focused on the upcoming election, the analyst said.

The policymaking landscape also includes a lower likelihood of Medicare-for-All in the next president's first term, as most candidates are not pushing the policy, he said.

“Investors are entering 2020 with a better understanding of the heavy lifting required to legislate aggressive health care policy proposals,” Haider said.

The analyst has above-consensus estimates for Amgen's revenue and EPS, adding that stock performance is likely to follow earnings revisions in a setting with receding headwinds and new pipeline readouts.

UnitedHealth Group also is likely to follow positive EPS revisions higher, “even if the multiple holds its slight historical relative P/E discount,” Haider said.

Dentsply Sirona is likely to see continued demand for its Primescan Intraoral scanner product, leading to market share gains along with savings from restructuring tracking ahead of plan, the analyst said.

Price Action

UnitedHealth Group shares were up 2.5% at the time of publication, while Amgen shares were higher by more than 3% and Dentsply Sirona shares were up 1.99%.

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