Healthcare stocks are off to a historically strong start this year. After a bad 2023, A.J The return will be long overdue.
Although only two weeks into trading, investors appear to be embracing the sector’s potential recovery. the
The health care sector in the Standard & Poor’s 500 index
The index rose 3% at the close of trading on January 12, while the
Standard & Poor’s 500
Almost flat.
Not only is this a notable reversal from last year — when the broader market gained 24% while the health care sector rose 0.3% — but it is also one of the sector’s best starts to the year in three decades, according to Goldman Sachs. Asad Haider in a memo published Tuesday. Flows into health care funds were stronger than flows into funds tracking any other sector in the S&P 500, the health care analyst wrote.
In addition, last week’s major healthcare investor conference in San Francisco, hosted by JPMorgan, saw less M&A activity and an overall more upbeat attitude compared to last year’s dreary and rainy year.
However, investors have shown some specific preferences in the recent health care stock buying spree. While U.S. drug stocks and large biotech stocks are outperforming the S&P 500 so far this year, according to Haider’s note Monday, managed care stocks and contract research companies have lagged behind.
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To understand where healthcare investors are looking in 2024 after beating out last year, we examined
Healthcare Fund Select Sector SPDR
For stocks that underperformed the S&P 500 in 2023 and rose at least 6% in 2024 as of the close of trading on January 12.
The 10 stocks that passed the screen include two that narrowly underperformed the S&P 500 in 2023: biotechnology company Regeneron Pharmaceuticals and drug distributor Cencora.
,
It was formerly known as AmerisourceBergen. Another, Moderna
,
The index has significantly underperformed the S&P 500, falling about 45% over the year.
Many of the stocks that have succeeded are biotech companies, including Moderna, Regeneron, and Amgen
,
Gilead Sciences
.
These names are benefiting from a surge in biotech company valuations, driven by belief in an easy interest rate environment and a wave of mergers and acquisitions. the
SPDR S&P Biotechnology ETF
It has risen about 37% since the beginning of November.
Other companies that have passed the screen include Merck
,
Which set a record on January 10, and the medical device company Medtronic
,
In addition to managed care company Centene
.
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The screen results point to a recovery in health care, with a particular focus on improving sentiment around biotechnology. What remains to be seen is how long this reversal can last during the year.
Write to Josh Nathan Kazis at josh.nathan-kazis@barrons.com