The past 2 years were tough for healthcare – but today the sector is trading at a discount despite strong growth prospects.
Hi I’m Guy from Kieger.
In the past 10 years there have been few occasions where the healthcare sector was valued at a bigger discount than today, relative to the rest of the market. This is shown by the yellow bars.
But in both these cases, this valuation discount reflected expectations of significantly slower earnings growth for healthcare relative to the market. This is shown by the blue bars.
Today, we are in a special situation. The healthcare sector is once again trading at a discount to the market, but its earnings are expected to grow almost 30% faster than the market over the next 3 years.
Our confidence in the sectors’ strong earnings growth was bolstered at the JP Morgan conference at the beginning of the month, where we saw management teams clearly focused on executing on innovation as well as the continuation of the strong underlying utilization trend.
That is why we see the healthcare sector at an attractive junction for 2025.
