The Eaton Vance Worldwide Health Sciences Fund (Trades, Portfolio) released its first-quarter portfolio this week, listing five new holdings.
Managed by Jason Kritzer and Samantha Pandolfi, the Boston-based fund invests heavily in the health care space. The portfolio managers look around the world for securities that are not only reasonably priced, but which they believe will grow in value over time.
Based on these criteria, the fund opened positions in Alexion Pharmaceuticals Inc. (ALXN, Financial), Fisher & Paykel Healthcare Corp. Ltd. (NZSE:FPH, Financial), Alnylam Pharmaceuticals Inc. (ALNY, Financial), Argenx SE (ARGX, Financial) and Sarepta Therapeutics Ltd. (SRPT, Financial) during the quarter.
Alexion Pharmaceuticals
After selling out of Alexion in the fourth quarter of 2018, the fund established a new 86,767-share holding, giving it 1.14% space in the equity portfolio. The stock traded for an average price of $115.74 per share during the quarter.
The New Haven, Connecticut-based pharmaceutical company, which is known for its Soliris drug, has a $29.74 billion market cap; its shares were trading around $132.66 on Thursday with a price-earnings ratio of 72.45, a price-book ratio of 3.11 and a price-sales ratio of 6.85.
The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.
GuruFocus rated Alexion’s financial strength 7 out of 10, driven by adequate interest coverage and a robust Altman Z-Score of 5.21, which indicates the company is in good fiscal standing.
The company’s profitability and growth scored a 9 out of 10 rating. Although the operating margin is in decline, it still outperforms 92% of competitors. Alexion is also supported by returns that outperform industry peers and a high Piotroski F-Score of 7, which suggests operations are healthy. Despite posting consistent earnings and revenue growth over a 10-year period, the business predictability rank of two out of five stars is on watch. GuruFocus says companies with this rank typically see their stocks gain an average of 7.3% per year.
Of the gurus invested in Alexion Pharmaceuticals, Spiros Segalas (Trades, Portfolio) has the largest stake with 1.63% of outstanding shares. Frank Sands (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), David Carlson (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Ray Dalio (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), John Hussman (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) are also shareholders.
Fisher & Paykel Healthcare
Eaton Vance invested in 639,037 shares of Fisher & Paykel, dedicating 0.62% of the equity portfolio to the holding. The stock traded for an average price of 13.24 New Zealand dollars ($8.77) per share during the quarter.
The medical devices manufacturer, which is based in Auckland, New Zealand, has a market cap of NZ$8.89 billion; its shares closed at NZ$15.65 on Thursday with a price-earnings ratio of 43.11 and a price-book ratio of 11.44.
Alnylam Pharmaceuticals
The health care-focused fund picked up 71,055 shares of Alnylam Pharmaceuticals, allocating 0.59% of the equity portfolio to the position. The stock traded for an average price of $78.66 per share during the quarter.
The Cambridge, Massachusetts-based biopharmaceutical company, which develops RNA interference therapeutics for genetic diseases, has an $8.87 billion market cap; its shares were trading around $82.54 on Thursday with a price-book ratio of 6.47 and a price-sales ratio of 111.68.
The median price-sales chart shows the stock is trading higher than its historical value.
Alnylam’s financial strength was rated 7 out of 10 by GuruFocus. In addition to having comfortable interest coverage, the high Altman Z-Score of 17.08 suggests the company is in fiscally healthy despite recording a decline in revenue per share over the last 12 months.
The company’s profitability and growth did not fare as well, scoring a 4 out of 10 rating. In addition to a declining operating margin, Alnylam is being weighed down by negative returns and a low Piotroski F-Score of 3, which indicates business conditions are poor. The company also has a one-star business predictability rank. According to GuruFocus, companies with this rank typically see their stocks gain an average of 1.1% per year.
With 9.25% of outstanding shares, the Vanguard Health Care Fund (Trades, Portfolio) is the company’s largest guru shareholder. Other gurus who hold the stock are Dodge & Cox, Lee Ainslie (Trades, Portfolio) and Pioneer.
Argenx
Eaton Vance purchased 24,205 shares of Argenx, expanding the equity portfolio by 0.31%. The stock traded for an average price of $107.55 per share during the quarter.
Based in the Netherlands, the biotechnology company, which develops treatments for cancer and autoimmune diseases, has a market cap of $4.79 billion; its shares were trading around $123.15 on Thursday with a price-book ratio of 6.73 and a price-sales ratio of 196.05.
The median price-book chart shows the stock is trading below its historical value.
Supported by no long-term debt and comfortable interest coverage, Argenx’s financial strength was rated 9 out of 10 by GuruFocus. In addition, the Altman Z-Score of 63.32 indicates the company is in good fiscal condition despite recording a slowdown in revenue per share growth over the last 12 months.
The company’s profitability and growth did not fare as well, scoring a 4 out of 10 rating. Although the operating margin is expanding, Argenx’s margins and returns are negative.
Vanguard is the company’s largest guru shareholder with 1.90% of outstanding shares. Ron Baron (Trades, Portfolio) and Cohen also have positions in the stock.
Sarepta Therapeutics
The fund bought 21,930 shares of Sarepta Therapeutics, impacting the equity portfolio by 0.31%. Shares traded for an average price of $123.36 during the quarter.
The Cambridge, Massachusetts-based company, which develops treatments for rare and infectious diseases, has an $8.57 billion market cap; its shares were trading around $116.25 on Thursday with a price-book ratio of 7.49 and a price-sales ratio of 25.50.
The median price-sales chart shows the stock is trading near its historical value.
GuruFocus rated Sarepta’s financial strength 6 out of 10. In addition to a stable cash-debt ratio, the robust Altman Z-Score of 8.01 suggests the company is in good standing financially.
The company’s profitability and growth scored a 4 out of 10 rating. Although the operating margin is expanding, Sarepta’s margins and returns are negative and the low Piotroski F-Score of 1 implies business conditions are poor. It also has a one-star business predictability rank.
Of the gurus invested in Sarepta, Sands has the largest stake with 4.34% of outstanding shares. Pioneer, Cohen, Ken Fisher (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio) and Greenblatt are also shareholders.
Additional trades
Eaton Vance also boosted several positions during the quarter, including Centene Corp. (CNC, Financial), WellCare Health Plans Inc. (WCG, Financial), Agios Pharmaceuticals Inc. (AGIO, Financial), Neurocrine Biosciences Inc. (NBIX, Financial), Lonza Group Ltd. (XSWX:LONN) and Incyte Corp. (INCY).
The fund’s $1.03 billion equity portfolio is composed of 64 stocks. According to its fact sheet, the fund outperformed its benchmark in 2018 with a return of 5.98%. The MSCI World Health Care Index posted a 2.51% return.
Disclosure: No positions.
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