Healthcare Sector - Poised for a reversal

Amid an economy that's overcoming the peaks of rates and inflation, there's a strategic shift towards cyclical exposure in sector investments, with a particular emphasis on the healthcare sector. This reflects a balance between value and growth, taking into account the sector's low positioning and the negative sentiment exiting 2023, while also recognizing the sector's resilience and appeal for quality investments at reasonable prices.

Healthcare continues to be attractive with high-quality growth-oriented investors, with companies like Eli Lilly, Intuitive Surgical, Merck, Boston Scientific, Edwards Lifesciences, and Regeneron being highlighted for their combination of growth, product innovation, and lifecycle. Goldman Sachs is nicknaming these companies: LIMBER for LLY, ISRG, MRK, BSX, EW, REGN!

In terms of estimates, Sales Growth was 7% for 2023 and is expected to be 6% for 2024, so not a major difference, slightly lower in fact.

However, earning growth is expected to reverse from -20% estimated in 2023 to +13% in 2024. That’s a solid reversal, noteworthy even when compared to every other sector.

Here we examine some takeaways from the recent earnings calls that set the stage for further growth in the Healthcare Sector driven by earnings and thematic plays like anti-obesity.

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