Healthcare Stocks Are Not Immune
The hospitals are chocka, but that doesn’t mean a windfall for all in the healthcare sector. Prepare for tales of haves and have-nots come earnings season. Early economic indicators suggest the “recession-proof” space is full of traps!
Pharmaceutical stocks hauled in record sales last year, but you wouldn’t know it by measuring customer satisfaction. They increased profits by a quarter amid a backdrop of nonstop public furor over medical bills. The insurance premiums keep going up, but waiting times are not coming down.
Revolutionaries want change, and they’re willing to vote it in November’s presidential election. The question facing investors is whether recent falls in for-profit profits will take the momentum out of Bernie Sander’s campaign. A vaccine would also deflect scrutiny and protect healthcare stocks from a democratic cliff edge.
Don’t expect the story to change in April. We’re seeing last year’s winnings get put to work by some healthcare companies, pouring billions into research and development for that elusive cure and mass-producing medical equipment. It’s only the non-corona wards that are in sure-fire financial trouble so far.
Surgery appointments are being panic-canceled, explaining the Invstr community’s bearish take on stretched hospital managers like Universal Health Services and HCA Healthcare. Walgreens isn’t faring much better, the retailer open and better off for the stockpiling rush, but now where all the symptomatic congregate! Customers are afraid of going!
In sum, the recession-proofing has failed to hold. A medical crisis has ironically proved to be the undoing of many healthcare stocks, and investors haven’t got long to adjust. New sentiment could see these companies attract less investment in the next, non-pandemic-related downturn. Assuming they go back to their old selves, some think that time could be a chance to beat expectations and claim redemption!