Healthcare Stocks Alluring in Defensive Market

Healthcare Stocks Alluring in Defensive Market

$GILD $REGN $LLY $VRTX

The COVID-19 coronavirus pandemic has put the spotlight on stocks in the US healthcare sector, home to the companies that could develop treatments, vaccines and improved diagnostics needed to engage and defeat the greatest public health enemy in over 100 yrs.

Healthcare has held up better than most S&P 500 sectors. Since the S&P 500 hit an all-time high on 19 February, healthcare is down about 17% as of Thursday, while the benchmark index has fallen 27%.

The sector is typically considered a defensive area of the market because some investors believe consumers will continue buying healthcare products even during uncertain times.

Shares of pharmaceutical and biotechnology companies have led the pack, including those working on potential treatments and other ways to address the rapidly spreading outbreak.

In particular, shares of Regeneron Pharmaceuticals Inc and Gilead Sciences Inc have risen 24% and 8%, respectively, since the S&P market its highs.

Healthcare has been one of the most popular places to put money in the past few weeks.

The sector recently traded at 12.9X forward 12-month earnings estimates, compared to 14X for the overall S&P 500, according to Refinitiv Datastream.

Pharmaceutical and biotech stocks, including Eli Lilly and Co and Vertex Pharmaceuticals Inc, make up 8 of the sector’s Top 10 performers since 19 February, all of which have gained or fallen far less than the broader market.

Have a healthy weekend, stay home!

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