Amid Steep Declines in Stocks, Investors Seek Winners in Health Care

Despite an 12% decline in the S&P 500 health-care sector this week, some shares are rallying

By Sebastian Pellejero - Feb 28, 2020

Excerpt below...

Shares of many health-care companies have posted steep declines during this week’s market rout. That has some investors looking for the bright spots.

Declines among health insurers, who could face higher-than-predicted medical costs, have been steep: UnitedHealth Group Inc. UNH 0.41% has fallen 15% for the week and Cigna Corp. CI 0.56% has dropped 16%. Hospital operator HCA Healthcare Inc. has fallen 14%.

The S&P 500 health-care sector is down 10.6% this week, slightly less than the 11.5% decline in the broad stock index. As governments world-wide continue to prepare for the public health fallout, investors said they are seeking companies that might find business helping to treat the epidemic.

With new coronavirus cases popping up from Pakistan to California, governments world-wide are taking further precautions. The continuing correction in the stock market is a buying opportunity in health-care, says David Kotok, chairman and chief investment officer at Cumberland Advisors, calling the coronavirus “a serious flu epidemic of a different type.”

“What we’re seeing is a development that becomes everyday more easily forecasted. There is a rollout world-wide of preventative medical structures, and that is happening every day,” said Mr. Kotok. “I wouldn’t buy the airlines, but I would buy the U.S. health care sector. We own it.”

Read the full article at (Paywall) The Wall Street Journal.

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