As the healthcare sector faces a downturn, the Q3 2024 results reveal some intriguing insights. What is the best course of action for the US healthcare sector?
The healthcare sector has recently shown significant growth in earnings and revenue.
However, the stock market performance of healthcare companies has not fully reflected these positive results over the past month, raising questions among investors. Why are stock prices falling when the balance sheets are healthy?
Healthcare Industry Performance
According to FactSet analysis, seven of the eleven sectors analyzed reported year-over-year growth, with the communication services and healthcare sectors leading the way. Specifically, the healthcare sector recorded earnings growth of 13.5%, ranking second among all sectors. By industry, biotechnology saw growth of 38%, pharmaceuticals 33%, and healthcare equipment and supplies 8%.
At the corporate level, Pfizer contributed significantly to this growth but is also among the companies that have played a major role in the recent decline of the stock segment over the past month.
In terms of revenue, the healthcare sector reported a 10.3% increase, surpassing the initial estimate of 6.9%.
What is Scaring Investors?
Despite this, the healthcare segment has been the subject of intense debate in the past month, particularly from a political standpoint. The appointment of Robert F. Kennedy Jr. as the next Secretary of the Department of Health by newly elected Donald Trump has clouded the future growth prospects of many companies in the sector.
Kennedy, often associated with the anti-vax movement, has sparked fears of increased regulation. Such measures could potentially slow growth and innovation in the sector, particularly in pharmaceuticals, which in recent years have been a key driver of the broader healthcare industry.
Healthcare Segment Falls in the Stock Market: Which ETF to Follow?
Among the ETFs with the largest assets under management (AUM) in the sector, the Health Care Select Sector SPDR Fund (XLV) stands out.
With AUM exceeding $40 billion, XLV passively tracks its benchmark index, the S&P Health Care Select Sector Index, and has a management fee of just 0.10%. The ETF also follows a policy of quarterly dividend distribution. Its main holdings include Johnson & Johnson, UnitedHealth Group, Pfizer, Merck & Co., and AbbVie.
As of November 21, 2024, the XLV ETF is down about 10% from its highs and appears to be trending further downward. Key levels to watch for the ETF include the support at $40 and resistance levels near prices seen during the consolidation phase of 2022-2023.
| DISCLAIMER The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader retains full autonomy and responsibility for their investment choices, as only they know their risk tolerance and investment horizon. The information provided is for informational purposes only and does not constitute an offer or public solicitation for savings or investments. |
Original article published on Money.it Italy 2024-11-21 14:03:00. Original title: Comprare azioni healthcare conviene? Il settore è in crescita ma crolla in borsa
