April 23, 2021
Healthcare has been one of the dominant stories of the pandemic, but its stock prices haven't matched the pace of the overall market. Healthcare stocks have lagged the S&P 500 earnings by 5% YTD. However, the biggest reason for this is the pandemic has shifted priorities and healthcare relies on the overall economy (making up about 18% of GDP) to pick up before it can fully bounce back. Additionally, the Biden Administration has yet to appoint a Food and Drug Commissioner which will be crucial in the upcoming years. However, valuations and earnings reports have been positive: UnitedHealth trades at 21x this year's forecast and Pfizer about 12x, well within normalcy. Healthcare will be in a good position as more speculative stocks settle down.
FINSUM + Magnifi: Economic growth is the key here. As the economy bounces back healthcare will eat its same piece of the pie, and there will be great value in healthcare funds.
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