Wall Street is still selling off health care stocks

https://www.axios.com/newsletters/axios-vitals-64abbaf8-c86f-4ac1-8561-525b0fd33c25.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

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Yesterday, UnitedHealth Group posted $3.5 billion of profit in the first quarter — its second-most profitable quarter ever — and collected more than $60 billion of revenue, Axios’ Bob Herman reports.

Yes, but: UnitedHealth’s stock price tanked by 4%, which consequently dragged down shares of the other major health insurers and hospital chains. Cigna’s stock price plummeted 8%, and Anthem and Humana were close behind. HCA tumbled 10%.

Driving the news: Wall Street remains fearful of “Medicare for All” becoming a reality, and UnitedHealth CEO Dave Wichmann tried to get ahead of the message by telling investors that single-payer would “jeopardize” people’s care.

  • Many investment bank analysts were perplexed by the sell-off, considering that UnitedHealth has more cash than it knows what to do with.
  • Steven Halper of Cantor Fitzgerald wrote to investors: “What more can you ask for? Take advantage of poor sentiment.”

The big picture: Medicare for All discussions matter far more to Wall Street right now, and that makes the industry’s Q1 financial reports a lot less important.

 

 

 

U.S. healthcare stocks seen maintaining momentum after strong 2018

https://www.reuters.com/article/us-usa-stocks-healthcare/u-s-healthcare-stocks-seen-maintaining-momentum-after-strong-2018-idUSKCN1P82A6

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One of the rare market bright spots last year, the U.S. healthcare sector remains a Wall Street darling despite a slow start to 2019.

As 2019 begins, healthcare .SPXHC is the most favored of the 11 main S&P 500 sectors, according to a Reuters review of ratings from 13 large Wall Street research firms, which recommend how to weigh those groups in investment portfolios.

Healthcare shares overall rose 4.7 percent last year, one of only two S&P 500 sectors, along with utilities, to post positive returns in 2018 as the benchmark index fell 6.2 percent.

Proponents cite the healthcare sector’s reasonable valuations, strong balance sheets and dividend payments among many companies, as well as the group’s upbeat outlook for earnings, which are less susceptible to economic cycles than other businesses.

If economic growth is slowing, some investors are wary of being too invested in cyclical sectors that thrive during an upswing, but do not want to be too defensive either.

“We are trying to find things that skirt both of those two categorizations, and healthcare is a really nice diversified earnings stream,” said Noah Weisberger, managing director for U.S. portfolio strategy at Bernstein.

Such diversity stems from the variety of companies comprising the sector: manufacturers of prescription medicines, makers of medical devices, such as heart valves and knee replacements, health insurers, hospitals and providers of tools for scientific research.

From a stock perspective, that means the sector includes potential fast-growing stocks, such as biotechs that can carry more risk and more reward, or large pharmaceutical companies and others that offer steadier, slower growth.

Investment advisory firm Alan B. Lancz & Associates sold some pharmaceutical holdings late last year that had posted big gains, such as Merck & Co (MRK.N), to move into biotech stocks it believed were undervalued, said Alan Lancz, the firm’s president.

“We have maintained our overweighting, which is unusual for us with a sector that has outperformed so dramatically,” Lancz said. “But mainly there are segments within the sector that still offer opportunity.”

For 2019, healthcare companies in the S&P 500 are expected to increase earnings by 7.5 percent, ahead of the 6.3 percent growth estimated for S&P 500 companies overall, according to IBES data from Refinitiv.

Health insurer UnitedHealth Group Inc (UNH.N), the sector’s third-largest company by market value, kicks off fourth-quarter earnings season for healthcare on Tuesday.

“Healthcare is one of the few sectors with high quality, above-market growth and it’s relatively immune to the array of macro headwinds that we see out there,” said Martin Jarzebowski, sector head of healthcare for Federated Investors.

Healthcare shares could also benefit from anticipation of increased dealmaking activity after two large acquisitions of biotechs were already announced this year.

Despite healthcare’s outperformance last year, the sector is trading at the same valuation as the S&P 500 – 14.5 times earnings estimates for the next 12 months – whereas healthcare on average has held a premium over the market for the past 20 years, according to Refinitiv data.

The sector also is valued at a discount, by such price-to-earnings measures, to defensive sectors, including consumer staples .SPLRCS, which trades at 16.6 times forward earnings, and utilities .SPLRCU, which trades at 15.8 times.

According to the Reuters review of sector weightings, healthcare is followed by financials .SPSY, then technology .SPLRCT. Real estate .SPLRCR ranks as the most negatively rated group.

The healthcare sector has lagged in the early days of 2019, rising less than 1 percent against a 3 percent rise for the S&P 500.

Some investors doubt healthcare will maintain its outperformance. JP Morgan strategists downgraded the sector to “underweight” last month, pointing in part to political rhetoric possibly turning “more negative on healthcare leading up to the 2020 presidential elections.”

The healthcare sector struggled ahead of the 2016 election, with the high U.S. cost of prescription medicines a prominent issue during the presidential campaign. With renewed scrutiny on drug pricing, such concerns linger.

The sector could suffer if investors become more optimistic about economic growth and flee defensive stocks, while the popularity of healthcare as an investment could work against it if the trade becomes overly crowded.

“There is risk there,” said Walter Todd, chief investment officer at Greenwood Capital in South Carolina. But given issues affecting other sectors, he said, “when you look around the market…you arrive by default at healthcare, and so I think that’s why a lot of people are interested in the sector.”

 

 

 

MARKETS TAKE BIGGEST HIT SINCE FEBRUARY, HEALTH STOCKS SLIDE

https://www.healthleadersmedia.com/finance/markets-take-biggest-hit-february-health-stocks-slide

Healthcare stocks were not immune from Wall Street’s worst day since the period of high volatility earlier this year.

Stocks fell across the board on Wednesday, as Wall Street suffered its worst trading day in more than eight months.

In response to heightened concerns over the Federal Reserve’s recent decision to increase interest rates and rising Treasury bond yields, stocks plunged in all three major trading markets. The Dow Jones Industrial Average fell sharply by 832 points, the S&P 500 dropped by 3.3%, and the Nasdaq slid by more than 4%.

Healthcare stocks suffered in the general market slide, with the Dow Jones U.S. Health Care Index down by 2.46% at the end of trading.

However, among the ‘Big 5’ insurers, Aetna’s slide of 0.15% was the smallest drop. The Hartford, Connecticut-based insurer was boosted by receiving approval Wednesday morning from the Department of Justice on its $69 billion merger with CVS. For its part, the retail pharmacy giant finished the day down 0.72%.

Here’s how the four other major health plans fared:

  • Cigna Corp. finished down 1.9%
  • UnitedHealth Group fell by 2.58%
  • Anthem Inc. ended down 2.34%
  • Humana Inc. fell by 1.82%

Below are how several other healthcare companies finished during Wall Street’s downturn on Wednesday:

  • Tenet Healthcare dropped by 8.43%
  • Centene Corp. dipped by 0.74%
  • Express Scripts Holding Co. fell by 1.69%
  • Teladoc, Inc. dropped by 8.42%
  • Community Health Systems finished down 6.35%
  • HCA Healthcare Inc. slipped by 3.19%
  • Molina Healthcare dropped by 3.52%
  • Magellan Health Inc. fell slightly by 0.61%
  • Athenahealth, Inc. dipped by 2.81%
  • Quorum Health Corp. fell by 6.89%
  • WellCare finished down 2.08%
  • LifePoint dropped slightly by 0.36%
  • Universal Health Services, Inc. slid by 1.36%

 

 

 

 

Evolent Health CEO gets a mention in NYSE ad on CNN

http://medcitynews.com/2015/10/evolent-health-in-nyse-ad-on-cnn/?utm_source=MedCity+News+Subscribers&utm_campaign=6b2aa0a1d2-MCN+Daily+Email&utm_medium=email&utm_term=0_5092836c41-6b2aa0a1d2-408855689

Evolent Health IPO

Healthcare stocks tumble as Wall Street rout slams sector

http://www.healthcarefinancenews.com/news/healthcare-stocks-tumble-wall-street-rout-slams-sector?mkt_tok=3RkMMJWWfF9wsRohsqjOZKXonjHpfsX57u4rUa6zlMI%2F0ER3fOvrPUfGjI4JSMRrI%2BSLDwEYGJlv6SgFQ7LHMbpszbgPUhM%3D

Companies listed in the S&P 500 Healthcare Index fell more than 4 percent at market open.