Healthcare stocks are off to a historically strong start this year. After the worst year of 2023, Their comeback will be long overdue.
Although it has only been trading for two weeks, investors appear to be welcoming the potential for a revival in the sector.of
S&P 500 Healthcare Sector
The index was up 3% as of the close of trading on January 12th.
S&P500
It's almost flat.
Not only is it a notable reversal from last year, when the overall market rose 24% and the healthcare sector rose 0.3%, but it's also the sector's best start to the year in 30 years, according to Goldman Sachs. This was one of the starting points. Asad Haider said in a memo published on Tuesday. Flows into health care funds were stronger than flows into funds targeting other S&P 500 sectors, health care analysts wrote.
Additionally, last week's major healthcare investor conference in San Francisco, sponsored by JPMorgan, saw some M&A activity and an overall more upbeat tone than last year's rainy events.
However, investors have shown some specific preferences in their recent binge on health care stocks. Haider's Monday note said U.S. pharmaceutical stocks and large-cap biotech stocks have outperformed the S&P 500 since the beginning of the year, while managed care stocks and contract research companies have lagged.
Advertisement – SCROLL TO CONTINUE
To understand where healthcare investors are looking in 2024 after holding off on investments last year.
Healthcare Select Sector SPDR Fund
Stocks that underperformed the S&P 500 index in 2023 but rose at least 6% in 2024 as of the close of trading on January 12 are eligible.
The 10 stocks that passed the test include two stocks that only marginally underperformed the S&P 500 in 2023: biotech Regeneron Pharmaceuticals and drug distributor Sencora.
,
Formerly known as Ame Source Bargain.Another thing: Moderna
,
It significantly underperformed the S&P 500, down about 45% for the year.
Many of the stocks that passed are biotech companies such as Moderna, Regeneron, and Amgen.
,
and Gilead Sciences
.
These stocks have benefited from rising biotech valuations, driven by an easing interest rate environment and confidence in the M&A wave.of
SPDR S&P Biotech ETF
It has risen about 37% since the beginning of November.
Other companies to pass the review include Merck.
,
Medical device company Medtronic hits record high on January 10th
,
Plus managed care company Centene
.
Advertisement – SCROLL TO CONTINUE
The results of the screen show a focus on a resurgence in healthcare, particularly improving sentiment towards biotech. What remains to be seen is how long this reversal will last into the rest of the year.
Email Josh Nathan-Kazis at josh.nathan-kazis@barrons.com.
