As the legislative body Congress starts to wrestle with what to do about the insurance plan Obamacare, many are wondering what healthcare stocks to buy in 2017. Experts say that if President-elect Donald Trump gets his way, there may be some big changes coming to the healthcare industry. Changes may impact stocks in a big way. While no one knows the exact direction the market will take, thinking about the basics will help investors.
What Is the Fate of Healthcare Stocks under President-elect Donald Trump?
Healthcare stocks have been the third worst performing sector since the elections. They have fallen about 6 percent in 2016. Throughout the campaign, President-elect Trump has said that he is against the sharp rises in drug prices. Some investors see this as an indication that he may be looking at negotiating drug prices with companies to bring down costs. This will hurt the bottom line affecting drug prices.
Most experts see the pick of Representative Tom Price as the head of the governmental agency Health and Human Resources as a sign that Trump will not try to use governmental regulations to control drug prices.
Pharmaceutical manufacturer Merck & Co. may have an outstanding year. Their hepatitis C drug Zepatier has been doing very well in trials. Cancer-fighting drug Ketruda just received priority review from the government. The company also has 10 other drugs nearing the completion of their clinical trials. They have paid out dividends for over 20 years. It should continue to do so easily.
Investors who had expected Hillary Clinton to become the next president had dumped biotech stock in a big way. Now that Donald Trump has won the election, there may be strong movement in this sector. If Congress can pass tax reforms, then these stocks may really take off.
Global pharmaceutical company Allergan CEO Brent Saunders has said that Trump’s victory will not end America’s frustration with the high cost of healthcare. He said:
“Let’s not fool ourselves. The outcome on November 8 didn’t change the fact that many Americans are angry about the rising cost of healthcare and their medicines. This anger will fuel the discussion about affordability well into the future.”
Many think that Allergan may be the breakout stock of 2017. Allergan is the maker of Botox and Restasis. Yet, these two companies only make up about one-third of this company’s wide range of drugs. Saunders is a pure master of mergers and acquisitions. Regardless of what Congress ends up doing, the medical device industry should have a strong year. Medical device maker and seller Stryker Corporation has had revenue growth for 10 years in a row. This year should be no different.
Quest Diagnostics Inc., a company that provides clinical laboratory tests to medical providers is a solid stock to have in any portfolio. This company regularly pays a dividend and has for over five years. While no one is likely to get rich owning this stock, it is a very steady solid pick.
There is much uncertainty in the healthcare stocks right now. If Congress abolishes Obamacare, then look for hospitals to have fewer admissions unless Congress creates a similar plan. Therefore, these stocks may have a disappointing year.
The uncertainty in the healthcare stocks market right now is driven by what Congress ends up doing about Obamacare. As President-elect Donald Trump promised, Congress came in getting ready to abolish the plan as fast as possible. Keep a watch on what they will replace it with as this may determine what healthcare stocks do in the future. Medical devices and biotech should be safe bets regardless of what Congress does in 2017.
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