What Happened?
A number of stocks jumped in the afternoon session after positive inflation data fueled hopes for an interest rate cut by the Federal Reserve. The latest Consumer Price Index (CPI) report showed inflation rose by a modest 0.2% in July and 2.7% over the last year. This cooler-than-expected data prompted a significant market rally, with the S&P 500, Dow, and Nasdaq all climbing as investors grew more optimistic. The prevailing view is that easing inflation gives the central bank room to lower interest rates. Lower rates typically reduce borrowing costs for businesses and make stocks more attractive relative to bonds, contributing to widespread gains across sectors like healthcare.
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:
- Generic Pharmaceuticals company Amphastar Pharmaceuticals (NASDAQ: AMPH) jumped 8.3%. Is now the time to buy Amphastar Pharmaceuticals? Access our full analysis report here, it’s free.
- Medical Devices & Supplies - Imaging, Diagnostics company QuidelOrtho (NASDAQ: QDEL) jumped 5.3%. Is now the time to buy QuidelOrtho? Access our full analysis report here, it’s free.
- Surgical Equipment & Consumables - Specialty company Integra LifeSciences (NASDAQ: IART) jumped 9%. Is now the time to buy Integra LifeSciences? Access our full analysis report here, it’s free.
- Outpatient & Specialty Care company Select Medical (NYSE: SEM) jumped 3.2%. Is now the time to buy Select Medical? Access our full analysis report here, it’s free.
- Immuno-Oncology company Regeneron (NASDAQ: REGN) jumped 3.1%. Is now the time to buy Regeneron? Access our full analysis report here, it’s free.
Zooming In On Integra LifeSciences (IART)
Integra LifeSciences’s shares are very volatile and have had 28 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 25 days ago when the stock dropped 7.1% as 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.
Integra LifeSciences is down 40.3% since the beginning of the year, and at $13.74 per share, it is trading 48.5% below its 52-week high of $26.70 from November 2024. Investors who bought $1,000 worth of Integra LifeSciences’s shares 5 years ago would now be looking at an investment worth $270.37.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
