Jim Cramer says the rally in drug stocks is 'far from over'

  • CNBC's Jim Cramer said Wednesday he expects drugmaker stocks to continue rallying in the near term.
  • "The drug stocks are roaring because, despite all the posturing ahead of last year's election, Washington hasn't done a thing about drug prices," the "Mad Money" host said.

CNBC's Jim Cramer said Wednesday the recent "stealth move" higher in drugmaker stocks can last a bit longer, believing the broad cohort is benefiting from a lack of Washington scrutiny.

"That's what's really driving these stocks: election relief. Even the ones that aren't doing anything exciting, like the sleepy old Bristol-Myers, have red-hot stocks," the "Mad Money" host said.

"Don't get me wrong, there's a lot to like about Bristol-Myers. … But should the stock be up here at $68? You bet it should," he added. "Wall Street will absolutely pay a higher price-to-earnings multiple for this thing now that the Biden administration seems to be turning a blind eye to the group."

Cramer pointed to shares of Pfizer and Johnson & Johnson to illustrate his point. Pfizer's stock is up more than 22% in the past month, boosted by increased investor confidence in the need for booster shots of the company's Covid vaccine.

"That doesn't explain why Johnson & Johnson's been running," up over 5% in the past month, Cramer said, contending its Covid vaccine appears to have lower efficacy against the new coronavirus variants than Pfizer.

What does explain the move in J&J shares, Cramer said is, "simple."

"The drug stocks are roaring because, despite all the posturing ahead of last year's election, Washington hasn't done a thing about drug prices," Cramer said. "I think the drug rally — which faltered and faltered hard today — is an opportunity because its far from over. Given the relatively low valuations in the group still every other sector, particularly technology, you could argue this move's only in its third inning. I like that— lot more baseball to play," he added.

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