Wall Street Sees Opportunity in Healthcare as Politicians Turn Health Insurers Into Political Footballs

Wall Street’s sickest sector might finally be due for a checkup. The healthcare sector is on track for a third straight year of underperformance — even with valuations sitting near record lows after adjusting for Big Tech distortions. But Goldman’s David Kostin believes the shakeout is creating “more opportunity for alpha than beta,” as political uncertainty over Affordable Care Act subsidies drags down insurers while selective plays in pharma, medtech, and healthcare services start to look appealing again.

Winning amid the wreckage: The healthcare bloodbath intensified this month when President Donald Trump called for ACA payments to bypass insurers entirely and go directly to individuals, slamming insurance companies as “money sucking” on Truth Social. That sent CenteneCNC

, Molina HealthcareMOH

, and Elevance HealthELV

plunging on Monday. The uproar stemmed from Washington’s record-long government shutdown over disagreements on extending ACA subsidies set to expire at year’s end. Still, Wall Street’s not writing off the sector just yet as dealmakers and analysts see plenty of life beneath the surface:

• Without the subsidies introduced in 2021, most of the 24M ACA enrollees face steep 2026 premium hikes, with federal costs hitting $138B this year versus $53B in 2020.
• Despite this headwind, nearly half of Goldman’s M&A Candidates basket now comes from healthcare, with deal activity expected to keep rising into next year.

The Doctor’s Shortlist

While insurers are caught in political crossfire, Goldman’s analysis reveals selective opportunities as wide return dispersion rewards careful stock selection over broad sector bets. The firm highlighted names like Jazz PharmaceuticalsJAZZ

, which is projecting 203% EPS growth, and InsuletPODD

trading at a 64% valuation discount to its five-year median. The opportunities extend beyond pharma into medtech and services.

• Regeneron PharmaceuticalsREGN
  trades at a 4% discount to historical valuations despite 6% projected EPS growth, though shares are down 9% this year.
• Universal Health ServicesUHS
  has rallied 27% year-to-date but still trades at a 16% valuation discount, with 8% earnings growth on the horizon.

The long game: Goldman cautions that steady economic growth, AI hype, and persistent policy uncertainty will likely keep a lid on broad sector gains — making this a market for precision, not passive bets. The political noise isn’t going away either, with midterms looming and Democrats signaling plans to put healthcare back at the center of their campaign playbook. But for investors willing to look past the headlines, the sector’s pain has reset the playing field — creating a rare window where fundamentals outweigh sentiment.