Healthcare earnings shine bright
The healthcare sector widened its year-to-date outperforming through a strong reporting season, with 4.8% lead vs the market as of 28th Feb. Both sales and earnings growth outpaced the market year-on-year, indicating both strong underlying factors as well as margin expansion.
Overall, we exit the quarter with an additional data point to support our view for faster relative earnings growth for the sector, despite headline-driven volatility.
Q4 Earnings Wrap
90% of healthcare companies have reported their earnings for the full year 2024, with most of them also giving guidance for the year ahead.
The results have been strong so far, with the majority of companies beating expectations.
While the overall picture was good, tools where a notable low-light in this respect: The recently cut of federal study grant funding due to DOGE initiatives have provided a new layer of uncertainty for the group.
Our expectations of faster earnings growth for the healthcare sector for the next few years is playing out so far, with healthcare earnings growing 14% year over year, vs 10.8% for the broad market.
Sales grew 9% year over year, reflecting the strong underlying demand for the sector, driven by population ageing, innovation and rising middle class populations globally.
Overall, we exit the quarter with an additional data point to support our view for faster relative earnings growth for the sector, driven by structural factors.
Headline volatility
The Trump administration has been the source of much headline volatility over the past few weeks. This has affected specific areas ranging from federal grant funding to Medicaid funding and vaccines.
Overall, these announcements have added an uncertainty premium to select names and sector areas. However, we view fundamentals as broadly unaffected
Top 5 last month:
- Grifols 28% Earnings and guidance beat
- M3 28% Earnings beat
- Gilead 18% Earnings beat
- CVS 16% Earnings and guidance beat
- Chugai 14% –
Source: Bloomberg Finance L.P., Kieger
Bottom 5 last month:
- Illumina -33% Guidance miss
- West Pharma -32% Guidance miss
- Bio-Rad Labs -27% Earnings and guidance miss
- Avantor -25% Earnings and guidance miss
- Neurocrine -22% Earnings and guidance miss
This news article has been issued through Kieger AG and is for distribution only under such circumstances as may be permitted by applicable law. This document is for information purposes only and does not constitute an offer. Past performance is not a reliable indicator of future results. The details and opinions contained in this document are provided by Kieger without any guarantee or warranty and are for the recipient’s personal use only. All information and opinions contained in this document are subject to change without notice. This document may contain statements that constitute “forward looking statements”. A number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. Data source: Statestreet / Factset.
