Healthcare Stocks Rally Huge through Election Whipsaw

Healthcare Stocks Rally Huge-Over 5% in One Week

• Uncertainty over election whipsaws healthcare stocks.
• Market Likes Gridlock from election? Legislative action on drug pricing unlikely.
• Focus should be on fighting the Pandemic and passing a Stimulus package.

Over a two week period healthcare and biotech stocks got buffeted by election uncertainty and settled on a gridlock scenario.  The healthcare stock rally this week was huge lifting all ETFs in the sector. We went from a horrible week to one of the best weeks in months. But a big risk from COVID lies ahead as coronavirus cases soar daily to the 120k mark.

We expect healthcare stocks to remain at current levels with COVID related news in the forefront. Diagnostic testing and antiviral therapies are hot areas and stocks will be volatile. One of our recent picks Orasure Technologies (OSUR) was up 5.3% to $13.31 on Friday with a positive earnings report with Q3 Revenues of $48M a 33% increase over Q3 in 2018.

Our new picks from last Sunday did well: Abbott (ABT), Abbvie (ABBV) up 5.22% and Merck (MRK) up 4.7%. Astara Zeneca (AZN) at $55 could be the next mover on vaccines milestones and oncology portfolio.

Technology stocks have been leaders especially the QQQ and should remain outperformers as the work-at-home trend continues.

We have developed a model portfolio for biotech and healthcare using ETFs. We will update the performance and trends weekly and expect the rally to continue through year end.United Health (UNH) was up 11% over the past week on the assumption that major healthcare disruptions from DEMS would be constrained.

But we are at a critical pivot point to see if the pandemic continues to weaken the economy.

Note: Credit Suisse has a virtual healthcare Conference through Nov 12 which should be bullish for the sector.