"Healthcare stocks have lagged the broader market for the past three years, weighed down by post-COVID earnings volatility, policy uncertainties around drug pricing, and a surge in tech-driven gains from the AI boom. The sector's relative earnings growth averaged just 6% annually over that stretch, trailing the S&P 500 's 15%, but signs of stabilization emerged in the third quarter, with healthcare posting the strongest quarterly return at over 7% versus the index's 1% gain."
"JPMorgan recently flipped to favoring the sector, citing three drivers that signal healthcare's potential rebound as AI enthusiasm cools: Easing policy risks after deals like Pfizer's ( ) most-favored-nation pricing agreement reduced uncertainty. Earnings clarity, as life sciences and managed care firms beat estimates by 13% and held 2026 guidance steady. M&A pickup, with biotech deals averaging one per week amid $150 billion in looming patent expirations."
"Biopharma AbbVie ( ) exemplifies this pivot. Its shares are up 25% year-to-date outpacing the S&P 500's roughly 12% gain by a 2-to-1 margin. Yet over three years, AbbVie has trailed the index, as AI-fueled rallies in tech names overshadowed defensive plays like healthcare. The stock sits 9% below its October high and trades at the same level it did in September, creating a potential entry point. Wall Street's fresh upgrade underscores why this dividend powerhouse could shine now."
Healthcare underperformed the broader market for three years, with relative earnings growth averaging 6% annually versus the S&P 500's 15%. Stabilization appeared in Q3, when healthcare returned over 7% compared with the index's 1% gain. JPMorgan shifted to favor the sector, citing easing policy risks after pricing agreements, earnings clarity as life sciences and managed care beat estimates by 13% and maintained 2026 guidance, and an M&A pickup with biotech deals averaging one per week amid about $150 billion in looming patent expirations. AbbVie stands out with a 25% year-to-date gain, dividend-focused history, and potential entry near recent trading levels.
Read at 24/7 Wall St.
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