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Quarter-End Insights

Our Outlook for Health-Care Stocks

While we remain bullish on the sector, health-care growth depends on the economy.

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  • Weak patient volumes are likely to persist, providing a headwind for most health-care companies. Nonetheless, thanks in large part to easy comps and a weak dollar, our forecast calls for moderate revenue and earnings growth. 
     
  • Changes on the regulatory landscape could threaten device companies. Damage, however, is likely to be less punitive than what the market anticipates, and device stocks present compelling investment opportunities.
      
  • M&A activity is likely to remain strong as health-care firms are flush with cash. We are somewhat skeptical that the Medco/Express-Scripts deal will gain regulatory approval.

Alex Morozov does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.