{"id":20057,"date":"2025-06-23T06:10:31","date_gmt":"2025-06-23T06:10:31","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=20057"},"modified":"2025-06-23T06:10:31","modified_gmt":"2025-06-23T06:10:31","slug":"healthcare-bets-back-on-the-table","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-asia\/week_ahead\/healthcare-bets-back-on-the-table\/","title":{"rendered":"Week Ahead: Healthcare Bets Back On The Table"},"content":{"rendered":"\n

Healthcare shares are typically viewed as a defensive stronghold in turbulent times. Yet, the past year defied this expectation. The sector tumbled 29%<\/a>, making it the worst performer across all S&P 500 categories. This surprising downturn has prompted traders to ask: What exactly went wrong, and could this pullback present an opportunity?<\/p>\n\n\n\n

In general, healthcare firms fare well even during economic slowdowns. People continue to require medications, medical equipment, and hospital care regardless of economic conditions. With an ageing global population and rising incidences of chronic illnesses, demand for healthcare remains structurally strong.<\/p>\n\n\n\n

However, despite these favourable long-term trends, the healthcare sector came under pressure over the past 12 months.<\/p>\n\n\n\n

A primary driver of the decline was surging costs, particularly for large firms like UnitedHealth Group (UNH)<\/a>. Post-pandemic, more patients, especially older individuals, sought medical services than expected. This led to a rise in medical expenditure, compressing profit margins. Concerns deepened when UnitedHealth\u2019s CEO stepped down<\/a>, followed by the company cutting its earnings outlook for the year.<\/p>\n\n\n\n

Even so, UnitedHealth continues to post solid top-line growth. Revenues climbed beyond $400 billion in 2023, although elevated costs have weighed on profits. Looking ahead, the firm aims to recalibrate premium pricing and rein in expenses to restore earnings momentum.<\/p>\n\n\n\n

Its financial fundamentals remain robust. UnitedHealth benefits from strong cash flow to support dividends and operations. That said, traders should monitor its increasing debt load<\/a>, which reached $76.9 billion, well above levels seen ten years ago. While debt-funded expansion may be strategically sound, prudent debt management remains essential.<\/p>\n\n\n\n

For traders, UnitedHealth shares currently appear undervalued. With an intrinsic value estimated around $570 per share, its forward price-to-earnings ratio of 13.2 looks appealing. If cost controls succeed, its stock could rebound once temporary pressures abate.<\/p>\n\n\n\n

Meanwhile, Novo Nordisk presents a contrasting picture. The Danish pharmaceutical powerhouse recorded strong revenue gains, primarily driven by its high-demand diabetes and weight-loss treatments. Profit margins stood at a remarkable 48%, outpacing many healthcare peers.<\/p>\n\n\n\n

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Novo Nordisk reclaims its position as Europe\u2019s most valuable public company, overtaking software developer SAP https:\/\/t.co\/jny5wYqIci<\/a><\/p>— Bloomberg (@business) June 13, 2025<\/a><\/blockquote>