Healthcare Sector Overview: Week of May 22–26, 2017



Healthcare sector revenues and earnings performance so far

Based on FactSet data, through May 26, 2017, 83% of healthcare stocks have delivered earnings above analysts’ estimates. About 16% of healthcare stocks have missed analysts’ estimates, while 2% reported earnings in line with analysts’ estimates.

FactSet data also shows that 72% of these healthcare companies managed to surpass analysts’ revenue estimates in 1Q17. The remaining 28% of these healthcare companies, however, reported revenue figures that lagged Wall Street analysts’ expectations.

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Performance of the market and the healthcare sector

Between May 19–May 26, 2017, the Health Care Select Sector SPDR ETF (XLV) rose 1.1%, supported by the favorable performance of Celgene (CELG), Abbott Laboratories (ABT), and Anthem (ANTM) stock. The iShares NASDAQ Biotechnology ETF (IBB) fell 0.8% mostly due to the dismal performance of Alexion Pharmaceuticals (ALXN).

Among the various SPDR ETFs across the sectors, XLV’s returns were higher than the Energy Select Sector SPDR ETF (XLE), the Materials Select Sector SPDR ETF (XLB), and the Financial Select Sector SPDR ETF (XLF).

XLV’s returns were lower than the Consumer Discretionary SPDR ETF (XLY), the Consumer Staples Select Sector SPDR ETF (XLP), the Industrial Select Sector SPDR ETF (XLI), the Technology Select Sector SPDR ETF (XLK), and the Utilities SPDR ETF (XLU).

During the same period, the broad market S&P 500 Index (SPY) and the Dow Jones Industrial Average (DIA) rose 1.4% and 1.3%, respectively. Healthcare accounts for ~13.4% of the S&P 500 Index and ~12.9% of the Dow Jones Industrial Average Index.

Healthcare subsectors

In the week of May 19–May 26, 2017, the Vanguard Health Care ETF (VHT), which tracks the MSCI US Investable Market Health Care 25/50 Index and holds more than 300 US health care companies, rose 1.1%. The iShares US Healthcare Providers ETF (IHF), which covers healthcare provider companies, rose 1.2%.

In the same timeframe, the SPDR S&P Biotech ETF (XBI) fell 0.6%, the SPDR S&P Health Care Equipment ETF (XHE) rose 2.0%, and the SPDR S&P Pharmaceuticals ETF (XPH), which tracks an equal-weighted index of US pharmaceutical firms, rose 1.4%.


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