What Happened?

A number of stocks jumped in the afternoon session after news of a new government prescription drug policy and a landmark deal with Pfizer eased investor concerns over stricter pricing regulations. 

The pharmaceutical and biotech sectors rallied for a second consecutive day following the announcement of a direct-to-consumer prescription drug selling website. A key driver for the optimism is a deal between Pfizer and the administration, allowing the company to avoid potential tariffs by reducing drug prices. This outcome is seen as a relief for the industry, which had braced for more severe measures. The move has reduced uncertainty in the sector, with other major players like Eli Lilly reportedly in negotiations for a similar agreement, signaling a potentially favorable new landscape for drugmakers.

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:

• Outpatient & Specialty Care company agilon health (NYSE: AGL) jumped 5.5%. Is now the time to buy agilon health? Access our full analysis report here, it’s free.
• Healthcare Technology for Patients company Tandem Diabetes (NASDAQ: TNDM) jumped 5.6%. Is now the time to buy Tandem Diabetes? Access our full analysis report here, it’s free.
• Testing & Diagnostics Services company NeoGenomics (NASDAQ: NEO) jumped 3.4%. Is now the time to buy NeoGenomics? Access our full analysis report here, it’s free.
• Healthcare Technology for Patients company Hims & Hers Health (NYSE: HIMS) jumped 3%. Is now the time to buy Hims & Hers Health? Access our full analysis report here, it’s free.
• Health Insurance Providers company Oscar Health (NYSE: OSCR) jumped 3.1%. Is now the time to buy Oscar Health? Access our full analysis report here, it’s free.

Zooming In On Tandem Diabetes (TNDM)

Tandem Diabetes’s shares are extremely volatile and have had 37 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 5.5% on the news that the U.S. government opened an investigation into the national security implications of medical equipment and device imports. 

The Commerce Department initiated a Section 232 investigation that covered a wide range of healthcare products, including items like blood glucose monitors, which are relevant to Tandem's business. This review evaluated U.S. demand, domestic manufacturing capacity, and the impact of imports. A key part of the investigation was to determine if tariffs or quotas should be used to protect national security. This created uncertainty and concern over potential cost increases for medical device companies, impacting investor sentiment.

Tandem Diabetes is down 63.8% since the beginning of the year, and at $12.98 per share, it is trading 68.9% below its 52-week high of $41.78 from October 2024. Investors who bought $1,000 worth of Tandem Diabetes’s shares 5 years ago would now be looking at an investment worth $116.85.

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