Making predictions about the winners and losers of an election is a hard job. After all, the pollsters cannot ever seem to get their polling correct. Still, as of Wednesday, November 4, the stock market wants to declare that the health care sector just scored a major victory with a split Congress, even if the presidential race is still not called. The logic is that gridlock will continue with a mixed Congress and that no single-payer and that no mandatory price caps will change the industry.
Large health-care-related companies within the S&P 500 have added countless billions of dollars in market capitalization. What is happening is that the “live-money voting” aspect of the stock market is suggesting that the industry was just given much more time to operate as they have been doing for years.
Another boost for health care stocks is that the proposed regulations, potential break-ups, and even government takeovers are off the table. Some of these companies may even be able to operate even more aggressively than have in recent years.
24/7 Wall St. has reviewed some of the top health care leaders to determine why they would be viewed so strongly with the election results not fully known. As with all political issues revolving around business sectors, surprises can occur, and the real winners and losers may not be known until some time has passed.
Here are six health care stocks that appear to be specific winners based on a mixed Congress, regardless of which presidential candidate is declared the winner of the 2020 election.
AbbVie Inc. (NYSE: ABBV) traded up over 9.6% at $96.35 on Wednesday, as the prescription drug maker likely just got to keep pricing power for top drugs like Humira, Rinvoq, Imbruvia and so on. AbbVie has a 52-week high of $101.28, but it was briefly a $120 stock early in 2018, and it has a dividend yield of more than 5%.
Anthem Inc. (NYSE: ANTM) is the operator of Blue Cross and Blue Shield, with some 41 million medical members through its affiliated health plans, as of December 31, 2020. Anthem is still growing because its most recent earnings report claimed to have 42.6 million members as of September 30, 2020. Anthem stock traded up 12.3% at $329.75, after hitting an all-time high. Its market cap is $82 billion.
Cigna Corp. (NYSE: CI) is a primary health insurance provider, and now its chance of falling under a single-payer system is significantly lower. Cigna shares were up 14% at $210.00 on Wednesday.
CVS Health Corp. (NYSE: CVS) already had acquired Caremark, but the 2018 acquisition of Aetna for some $69 billion in total value made the pharmacy into a fully integrated health care provider (short of owning a hospital anyway). CVS Health stock traded up 3% at $61.25.
Eli Lilly and Co. (NYSE: LLY) was up over 15% at $150.35 in active trading, and its market cap was $144 billion. The stock is also still under the 52-week high of $170.75, and its dividend yield is about 2.2%. Eli Lilly makes too many drugs and has too many partnerships to point to any single winner here, other than the logic that it gets to keep pricing power.
UnitedHealth Group Inc. (NYSE: UNH) traded up 11% at $356.50 on Wednesday. The nation’s largest health insurer is a Dow Jones industrial average component and was showing outsized gains for the index. With a $338 billion market cap, UnitedHealth hit an all-time high on Wednesday, and its share price is now up enough that its dividend yield is a mere 1.4%.
Another interesting aspect is that these are not the absolute percentage gainers from the S&P 500’s health care sector. One company with a potential Alzheimer’s treatment that just moved closer to FDA approval can claim that title.