What’s Next for the Healthcare Sector after a Weak July?
The Health Care Select Sector SPDR ETF (XLV), which tracks the performance of the healthcare sector, saw a weaker performance in July 2017. It rose marginally by 0.8% during the month. Major healthcare stocks such as Johnson & Johnson (JNJ), Pfizer (PFE), Merck (MRK), and Amgen (AMGN) returned 0.33%, -1.3%, -0.32%, and 1.3%, respectively, in July 2017.
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Johnson & Johnson represents nearly 12.1% of the Health Care Select Sector SPDR ETF’s holdings. The stock showed a strong performance on June 9, 2017, after the European Commission approved its proposal to acquire Actelion, a Swiss biotech company. Similarly, some merger and acquisition activity in other healthcare companies is driving the movement of healthcare stocks.
The healthcare reform bill is seeing delays in Congress. After much effort by the Republican administration, the bill is not getting the required votes. This uncertainty is creating concern among investors. However, the earnings figures of major healthcare stocks are looking impressive. On July 18, 2017, JNJ reported its 2Q17 earnings. It posted EPS (or earnings per share) of $1.83, which beat analysts’ estimates of $1.80. The stock posted a one-year EPS growth rate of 8.1%.
In the next part of this series, we’ll analyze the performance of the materials sector in July 2017.