Healthcare: Overvalued, but Opportunities in Drug and Biotech
We don't expect a major overhaul of the U.S. healthcare system.
Morningstar's US Healthcare Index has increased 22% over the trailing 12 months amid solid underlying fundamental performance (Exhibit 1). However, the returns have underperformed the broader equity market performance of 31%. We believe concerns around potential changes in U.S. healthcare policies have become more elevated, with politicians increasing rhetoric for the upcoming presidential election. The heightened fears around potential healthcare policy changes have increased the sector’s uncertainty and weighed on healthcare’s relative performance.
Healthcare sector index vs. market index. - source: Morningstar
Damien Conover, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.