Three Healthcare Stocks to Avoid: CooperCompanies, U.S. Physical Therapy, and Illumina

The healthcare industry has tumbled 1.4% over the past six months, lagging the S&P 500's 15.7% gain. CooperCompanies, U.S. Physical Therapy, and Illumina are three healthcare stocks to avoid. CooperCompanies has unexciting sales trends and declining free cash flow margin, while U.S. Physical Therapy has subscale operations and a declining free cash flow margin. Illumina's valuation ratio is high at 31.8x forward P/E.

Healthcare stocks in India experienced a significant downturn on Thursday following U.S. President Donald Trump's announcement of a 100% tariff on branded and patented drugs starting October 1. The move, which exempts only those manufacturers with U.S. plants under construction or recently broken ground, has sent ripples through the industry, with the Nifty Healthcare index falling by 1.2% India’s Healthcare Index Sinks After Trump’s Pharma Tariff Blow — SEBI Analyst Sees Risks For Gland, Biocon, Dr. Reddy’s^[1].

The impact of the tariffs varies among companies. Gland Pharma, which lacks a U.S. manufacturing footprint and relies heavily on branded or patented formulations, is particularly exposed. In contrast, companies like Syngene International, Piramal Pharma, and Zydus Lifesciences, which have contract manufacturing models and biologics portfolios, are less affected. Meanwhile, companies with large branded generics or biosimilars presence, such as Dr. Reddy’s Laboratories and Biocon, will need to accelerate U.S. production to avoid margin erosion India’s Healthcare Index Sinks After Trump’s Pharma Tariff Blow — SEBI Analyst Sees Risks For Gland, Biocon, Dr. Reddy’s^[1].

Trump's announcement builds on his ongoing trade measures aimed at repatriating drug manufacturing. The latest rules extend to prescription medicines, biologics, specialty drugs, and over-the-counter products, while generic drugs remain exempt. The tariffs are part of a phased plan that began with a small tariff and will increase to 150% within 18 months and ultimately to 250% India’s Healthcare Index Sinks After Trump’s Pharma Tariff Blow — SEBI Analyst Sees Risks For Gland, Biocon, Dr. Reddy’s^[1].

Retail sentiment on platforms like Stocktwits reflects the uncertainty. Gland Pharma, Syngene International, Piramal Pharma, Zydus Lifesciences, Dr. Reddy’s Laboratories, and Biocon have seen varied performances this year, with Gland Pharma up 6.5% and Syngene International down 29.1% India’s Healthcare Index Sinks After Trump’s Pharma Tariff Blow — SEBI Analyst Sees Risks For Gland, Biocon, Dr. Reddy’s^[1].

In a separate development, FTAI Aviation reported a standout quarter with a 52.4% year-on-year revenue increase, generating over US$400 million in positive adjusted free cash flow. The company's continued dividend payouts underscore confidence in present cash flows FTAI Aviation (FTAI) Is Up 5.4% After Standout Revenue Surge and Record Free Cash Flow^[2].