Jim Cramer explains why he backs healthcare stocks

CNBC’s Jim Cramer on Tuesday addressed the importance of investing for the long term, telling investors it’s wise to evaluate certain pharmaceutical stocks for their growth prospects.

“Ask yourself what happens if things get better, please. What if the future is brighter than the past?” he said. “If that’s the case, and I think it is, then you’ll have a lot of winners with these drug and medical device plays.”

Cramer reflected on his time at the JPMorgan healthcare conference in San Francisco so far, saying he saw many drug makers that he thinks Wall Street isn’t evaluating accurately. The long-term possibilities for these companies are strong and lucrative, he said, even if the present doesn’t seem quite as impressive.

He reviewed Eli Lilly, which is known for its popular GLP-1 weight loss and diabetes drugs. The pharmaceutical giant’s stock closed down more than 6% Tuesday after it cut revenue guidance, citing lesser demand than previously expected for the well-known medicine. But Cramer said he wouldn’t write off the stock due to “one subpar quarter,” saying GLP-1 drugs have the potential to treat many conditions beyond their current uses. He added that Eli Lilly is also developing an oral version of the injectable treatment, which might be preferable for many patients. And despite stiff competition on the GLP-1 front, Cramer suggested Eli Lilly has more resources to scale the product than some of its peers.

Eli Lilly did not immediately respond to request for comment.

Cramer also asserted that companies like Merck and Regeneron aren’t getting enough credit for the breadth of their portfolios and investments in promising new treatments. Aside from Merck’s top-selling cancer treatment, Keytruda, Cramer pointed to its fairly unique anti-cancer vaccine and a multi-billion dollar acquisition that included a newly-approved drug for a serious and rare lung condition. He also highlighted Regeneron’s eye care franchise and asthma treatment, as well as its experimental antibody cocktail President-elect Donald Trump received when he contracted Covid.

Merck and Regeneron did not immediately respond to request for comment.

“Look, stocks go in and out of style in the Wall Street fashion show,” Cramer said. “Whole sectors wallow at times. Right now, healthcare’s in some sort of doghouse the likes of which I’ve never seen.”

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Eli Lilly.