MarketsMar 2, 2025
Amid Market Tumult, Investors Are Looking To Health Care Stocks For Stability, Cheaper Valuations
Defensive Rotation
Noah Weidner
Discover
With the market struggling, it looks like equities could use a ‘fix me up’, investors are hoping that they found it in healthcare stocks. Downtrodden since the end of the pandemic, WSJ reports that investors are once again revisiting the healthcare sector, which has seen little movement or action — as measured by the Health Care Select Sector SPDR Fund — since Sept. 2021. For some investors, that’s not a bug, that’s a feature of an increasingly uncertain market.
Anatomy of a rally: Based on research from S&P Global Market Intelligence, healthcare is among the cheapest sectors ranked by forward earnings — at just under 18x. Helping matters, research from FactSet found that information tech and healthcare had the highest ratio of companies reporting revenues above estimates.
Buyer beware: However, the opportunity is not spread equally. Enterprises that are facing patent cliffs — like Pfizer, Bristol-Myers Squibb, and others — are not joining in the rally. And further, there are political risks; the Trump administration recently said it would reevaluate Moderna’s bird-flu vaccine trial funding, which has investors squeamish about the industry’s comeback.
