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The broader medical sector should be in the spotlight now on higher demand for coronavirus vaccine well as the treatment as the Delta variant of the COVID-19 scare rises. Apart from this, upbeat earnings and decent valuation should give the sector a further drive.
Upbeat Earnings, Covid-19-Related Sales
Earnings expectations of the healthcare sector are upbeat as the sector is likely to log 14.6% growth in the second quarter of 2021 on revenue growth of 15.7%, per the Earnings Trends issued on Jul 14, 2021.
Higher demand for drugs, testing and vaccines for COVID-19 is a plus for the sector. Roche’s first-half net profit gained 2% to 8.22 billion Swiss francs ($8.96 billion) and sales rose by 8% at constant exchange rates to a better-than expected 30.71 billion francs.
Diagnostics division sales grew 51% in the first half due to high demand for Covid-19 tests and strong momentum in routine testing, the drugmaker said. This helped to make up for a 3% decline in pharmaceuticals sales.
Johnson & Johnson (JNJ) raised its overall revenue estimate for the year and forecast $2.5 billion in sales of its COVID-19 vaccine while Pfizer and Moderna estimate $26 billion and $19.2 billion in annual sales of their vaccines, respectively.
Most recently, Moderna (MRNA - Free Report) , known for its success in the COVID-19 vaccine, entered the big league with its addition to the S&P 500 Index. The stock was up nearly 175% this year last week, leading to Moderna’s market valuation of more than $115 billion (read: Moderna Soars on Inclusion to S&P 500: ETFs in Focus).
Against this backdrop, below we highlight a few healthcare ETFs that have been hovering around an all-time high level.
The underlying StrataQuant Health Care Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index. Medical Equipment and Services (45.44%), Pharmaceuticals and Biotechnology (32.44%) and Health Care Providers (22.12%) are the top three holdings of the fund. The fund charges 61 bps in fees.
The underlying Dow Jones U.S. Health Care Index measures the performance of the healthcare sector of the U.S. equity market. The fund charges 43 bps in fees. Pharmaceuticals (26.02%), Health Care Equipment (24.84%), Biotechnology (16.63%), Managed Health Care (11.42%) and Life Sciences Tools & Services (10.19%) are the top five sectors of the fund (read: 2 Sector ETFs Hovering Around All-Time Highs).
US Innovative Healthcare iShares Evolved ETF
This ETF is active and does not track a benchmark. The fund seeks to provide access to U.S. companies with innovative healthcare exposure, as classified using a proprietary classification system. The fund charges 18 bps in fees (read: JNJ Beats on Q2 Earnings, Ups View: ETFs to Buy).
The underlying MVIS US Listed Biotech 25 Index tracks the overall performance of companies involved in the development and production, marketing and sales of drugs based on genetic analysis and diagnostic equipment. The fund charges 35 bps in fees.
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Time for Pharma and Healthcare ETFs?
The broader medical sector should be in the spotlight now on higher demand for coronavirus vaccine well as the treatment as the Delta variant of the COVID-19 scare rises. Apart from this, upbeat earnings and decent valuation should give the sector a further drive.
Upbeat Earnings, Covid-19-Related Sales
Earnings expectations of the healthcare sector are upbeat as the sector is likely to log 14.6% growth in the second quarter of 2021 on revenue growth of 15.7%, per the Earnings Trends issued on Jul 14, 2021.
Higher demand for drugs, testing and vaccines for COVID-19 is a plus for the sector. Roche’s first-half net profit gained 2% to 8.22 billion Swiss francs ($8.96 billion) and sales rose by 8% at constant exchange rates to a better-than expected 30.71 billion francs.
Diagnostics division sales grew 51% in the first half due to high demand for Covid-19 tests and strong momentum in routine testing, the drugmaker said. This helped to make up for a 3% decline in pharmaceuticals sales.
Johnson & Johnson (JNJ) raised its overall revenue estimate for the year and forecast $2.5 billion in sales of its COVID-19 vaccine while Pfizer and Moderna estimate $26 billion and $19.2 billion in annual sales of their vaccines, respectively.
Most recently, Moderna (MRNA - Free Report) , known for its success in the COVID-19 vaccine, entered the big league with its addition to the S&P 500 Index. The stock was up nearly 175% this year last week, leading to Moderna’s market valuation of more than $115 billion (read: Moderna Soars on Inclusion to S&P 500: ETFs in Focus).
Against this backdrop, below we highlight a few healthcare ETFs that have been hovering around an all-time high level.
ETFs in Focus
Healthcare Alphadex First Trust ETF (FXH - Free Report)
The underlying StrataQuant Health Care Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index. Medical Equipment and Services (45.44%), Pharmaceuticals and Biotechnology (32.44%) and Health Care Providers (22.12%) are the top three holdings of the fund. The fund charges 61 bps in fees.
US Healthcare iShares ETF (IYH - Free Report)
The underlying Dow Jones U.S. Health Care Index measures the performance of the healthcare sector of the U.S. equity market. The fund charges 43 bps in fees. Pharmaceuticals (26.02%), Health Care Equipment (24.84%), Biotechnology (16.63%), Managed Health Care (11.42%) and Life Sciences Tools & Services (10.19%) are the top five sectors of the fund (read: 2 Sector ETFs Hovering Around All-Time Highs).
US Innovative Healthcare iShares Evolved ETF
This ETF is active and does not track a benchmark. The fund seeks to provide access to U.S. companies with innovative healthcare exposure, as classified using a proprietary classification system. The fund charges 18 bps in fees (read: JNJ Beats on Q2 Earnings, Ups View: ETFs to Buy).
Biotech Vaneck ETF (BBH - Free Report)
The underlying MVIS US Listed Biotech 25 Index tracks the overall performance of companies involved in the development and production, marketing and sales of drugs based on genetic analysis and diagnostic equipment. The fund charges 35 bps in fees.