Almost 50% of Fund Managers are Overweight the Healthcare Sector

Almost 50% of Fund Managers are Overweight the Healthcare Sector

$GILD $PFE $INO $MRNA $JNJ $GSK $SPY

Investors are diversifying bets in the healthcare sector, as the rush to develop treatments for C-19 coronavirus has driven up prices for some Big Pharma stocks.

Now at least 48% of fund managers are overweight healthcare stocks, a BofA survey showed, and the S&P 500 healthcare sector is up nearly 34% since its March low.

Hopes for a treatment have also sparked outsize rallies in the shares of companies such as Moderna (NASDAQ:MRNA) and Inovio Pharmaceuticals (NASDAQ:INO), up 253% and 327% since the start of the year, respectively, as of Friday’s close.

In recent wks, news of potential treatments or vaccines to fight the medical malpractice chaos have occasionally caused swings in broad markets.

Yet, some fund managers believe lasting profits may be elusive for vaccine-makers, leading them to seek corners of the healthcare sector that could see longer-term benefits from the fight against the C-19 coronavirus.

Large pharmaceutical companies such as Johnson & Johnson (NYSE:JNJ) and GlaxoSmithKline Plc (NYSE:GSK) have said they plan to make any successful vaccine available at cost, though they could reap profits later if a seasonal shot is needed .

Multiple treatments could divide the market between many players as 100’s are working on a solution.

The Big Q: Does anyone make a lot of money on this?

The Big A: With so many players with meaningful resources, it is hard to predict what the ultimate market share of any 1 approach will be.

Signs of progress on possible treatments could bolster the case for a quicker economic recovery and further drive the rally that has boosted the S&P 500 around 30% from its late March lows.

In the next 2 wks, Gilead Sciences (NYSE:GILD) is expected to announce results of clinical studies of its potential C-19 coronavirus treatment remdesivir for patients with moderate symptoms of C-19. Pfizer (NYSE:PFE) has said it expects to release safety data for initial human testing of experimental vaccine by 31 May.

Have a healthy Memorial Day weekend, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.