What Happened?

A number of stocks fell in the afternoon session after a proposed 2027 federal budget revealed significant spending cuts for key health agencies. 

The budget request was expected to reduce funding for the Department of Health and Human Services (HHS) and includes a proposed $5 billion cut for the National Institutes of Health (NIH). The NIH is a critical source of funding for medical research, and any reduction could impact innovation and development pipelines for pharmaceutical and biotech firms. Although Congress was considered unlikely to approve the full extent of the cuts, the proposal introduced uncertainty for the sector.

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:

• Testing & Diagnostics Services company Guardant Health (NASDAQ: GH) fell 4%. Is now the time to buy Guardant Health? Access our full analysis report here, it’s free.
• Branded Pharmaceuticals company Organon (NYSE: OGN) fell 4.6%. Is now the time to buy Organon? Access our full analysis report here, it’s free.
• Drug Development Inputs & Services company Fortrea (NASDAQ: FTRE) fell 3.4%. Is now the time to buy Fortrea? Access our full analysis report here, it’s free.
• Medical Devices & Supplies - Imaging, Diagnostics company QuidelOrtho (NASDAQ: QDEL) fell 6.4%. Is now the time to buy QuidelOrtho? Access our full analysis report here, it’s free.
• Drug Development Inputs & Services company Charles River Laboratories (NYSE: CRL) fell 3.6%. Is now the time to buy Charles River Laboratories? Access our full analysis report here, it’s free.

Zooming In On QuidelOrtho (QDEL)

QuidelOrtho’s shares are extremely volatile and have had 42 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 10 days ago when the stock dropped 4.6% on the news that major indices including the S&P 500 and Dow Jones Industrial Average fell sharply as investors reacted to escalating uncertainty tied to the U.S.-Iran conflict and policy deadlines set by the Trump administration. Markets dislike unpredictability, and these fears were amplified, raising concerns of prolonged conflict and rising oil prices. This negative outlook reflected in consumer confidence, with the University of Michigan's sentiment index sliding to a three-month low.

QuidelOrtho is down 44% since the beginning of the year, and at $16.13 per share, it is trading 56.9% below its 52-week high of $37.42 from May 2025. Investors who bought $1,000 worth of QuidelOrtho’s shares 5 years ago would now be looking at only $123.88.

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