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Investors may be overlooking the long-term growth opportunities of the healthcare sector. JPMorgan Asset Management global market strategist Stephanie Aliaga sits down with Seana Smith and Brad Smith on Morning Brief to discuss her bullish outlook for the health care sector (XLV).
The strategist compares the healthcare sector's positioning to the financial sector's recent gains. "This week posted really strong reports, particularly in profitability. That's a part of the market on financials that is benefiting from a lot of the kind of macro tailwinds on deregulation, but also a soft landing," she says. "I think some similar things can be said for healthcare."
"Healthcare is massively underperformed. I think a big theme for us this year when rebalancing portfolios is looking where expectations are relative to the kind of potential and earnings delivery expected," Aliaga says, adding that healthcare is an "industry that is ripe for innovation, ripe for M&A and partnerships this coming year." She notes that medtech and pharma are two particular areas in healthcare that are positioned to benefit "ahead of the upcoming patent cycle."
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With Trump returning to the White House, Aliaga notes that there is "a lot of uncertainty." The strategist adds, "I think there is absolutely bipartisan support for lowering the drug prices, but then you also have to balance that with the incentives that these companies have: to continue to push the bar forward when it comes to innovation."
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This post was written by Naomi Buchanan.