We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Healthcare ETFs Are Hovering Around One-Year Highs
Read MoreHide Full Article
Key Takeaways
Healthcare ETFs are up on earnings growth, attractive valuations, clinical advances & defensive appeal.
Promising drug-trial results & expanding GLP-1 adoption are boosting optimism across healthcare subsectors.
BBH, PBE, IXJ, IHF & XLV offer exposure to healthcare areas benefiting from the sector's rebound.
Healthcare ETFs are hovering around one-year highs because the sector is benefiting from a solid combination of improving earnings visibility, upbeat clinical results, attractive relative valuations, and a rotation out of overcrowded AI/tech trades into defensive growth.
After years of underperformance, the sector has brightened up over the past month. State Street Health Care Select Sector SPDR ETF (XLV - Free Report) has surged 6.4% over the past month compared with flat returns seen in State Street SPDR S&P 500 ETF Trust (SPY - Free Report) .
SPY has returned about 9.2% over the past six months, while XLV has added 23.2% during the same timeframe (as of Oct. 20, 2026).
Inside the Rally
Earnings Acceleration
S&P 500 healthcare companies are expected to deliver double-digit earnings growth from fourth-quarter 2026 through 2027, a sharp turnaround after years of underperformance. This forward profitability upgrade is drawing fresh institutional flows, per Reuters.
Improving Margins
J.P. Morgan analysts noted in early August thatafter lagging in early 2026, healthcare now offers “durable growth, technology-like profitability, attractive valuation and diversification benefits” compared with the AI-heavy market leadership, as quoted on Reuters.
Solid Dealmaking
M&A activity is surging. M&A value in the sector has touched nearly $284 billion this year, according to Dealogic, approaching 2025's total of $306 billion and topping every other year since 2021, as quoted on Reuters in August.
Pharma Stocks Entered H2 2026 On Firmer Footing
Large pharmaceutical companies entered the second half of 2026 on much firmer footing than they were a year ago. Concerns over tariffs and U.S. drug pricing policies have eased considerably, allowing investors to shift their focus back to company fundamentals.
Meanwhile, despite continued leadership changes at the Food and Drug Administration (FDA), drug approvals have remained healthy, with early indications pointing to a more flexible regulatory environment, per a Janus Henderson report.
Major Clinical Data Releases in 2026
Personalized mRNA cancer vaccine — Moderna and Merck: Their personalized mRNA vaccine, combined with Keytruda, met trial goals for reducing melanoma recurrence and preventing cancer spread compared with Keytruda alone. It could create a new oncology growth opportunity, although overall-survival data remain outstanding.
Retatrutide — Eli Lilly: In the TRIUMPH-1 trial, participants receiving the 12-mg dose lost an average of 28.3% of their body weight over 80 weeks. The results strengthen Lilly's potential position in next-generation obesity treatments.
Tezspire — Amgen and AstraZeneca Positive Phase 3: Amgen and AstraZeneca reported significant improvements in eosinophilic esophagitis, with sustained symptom relief and histologic remission through 52 weeks, potentially expanding Tezspire’s market beyond severe asthma.
Povetacicept — Vertex Pharmaceuticals: In the RAINIER trial, povetacicept reduced proteinuria by 49.8% versus placebo at Week 36, meeting the primary endpoint. The findings support its potential as a treatment for IgA nephropathy, a kidney disease that can progress to kidney failure.
Imdelltra plus Imfinzi — Amgen and AstraZeneca:The DeLLphi-305 trial showed a statistically significant and clinically meaningful overall-survival benefit when Imdelltra was added to Imfinzi for first-line maintenance treatment. The trial also met secondary progression-free survival and response-rate endpoints.
Bezuclastinib combination — Cogent Biosciences: The PEAK trial reported median progression-free survival of 16.5 months with bezuclastinib plus sunitinib versus 9.2 months with sunitinib alone. The results offer a potential treatment advance for patients with gastrointestinal stromal tumors previously treated with imatinib.
Encouraging Developments in the GLP-1 Market
Novo Nordisk's CagriSema delivered 25% average weight loss at 68 weeks among adult women in a new analysis conducted after a late-stage trial, with significant results across menopause statuses, potentially outperforming Wegovy, as quoted on CNBC.
CagriSema combines semaglutide, the active ingredient in Novo Nordisk’s Wegovy and Ozempic, with cagrilintide, which targets the amylin pathway to regulate hunger and fullness. The drug is expected to be launched in early 2027.
According to J.P. Morgan, only about 2% of the global obese population and 7% of diabetes patients currently receive GLP-1 treatments. Meanwhile, Gallup’s article published in mid-2026 found that the share of U.S. adults currently using GLP-1 medications for weight loss rose from 3% in 2024 to 11% in 2026. Together, these figures underscore the drug segment’s growth potential as treatment adoption expands.
ETFs in Focus
Against this backdrop, we have highlighted a few healthcare ETFs that have been hovering around a 52-week high lately.
Vaneck Biotech ETF (BBH - Free Report) – Up 30.8% year to date (as of Oct. 20, 2026)
View the Zacks #1 Rank List
Image: Bigstock
Why Healthcare ETFs Are Hovering Around One-Year Highs
Key Takeaways
Healthcare ETFs are hovering around one-year highs because the sector is benefiting from a solid combination of improving earnings visibility, upbeat clinical results, attractive relative valuations, and a rotation out of overcrowded AI/tech trades into defensive growth.
After years of underperformance, the sector has brightened up over the past month. State Street Health Care Select Sector SPDR ETF (XLV - Free Report) has surged 6.4% over the past month compared with flat returns seen in State Street SPDR S&P 500 ETF Trust (SPY - Free Report) .
SPY has returned about 9.2% over the past six months, while XLV has added 23.2% during the same timeframe (as of Oct. 20, 2026).
Inside the Rally
Earnings Acceleration
S&P 500 healthcare companies are expected to deliver double-digit earnings growth from fourth-quarter 2026 through 2027, a sharp turnaround after years of underperformance. This forward profitability upgrade is drawing fresh institutional flows, per Reuters.
Improving Margins
J.P. Morgan analysts noted in early August thatafter lagging in early 2026, healthcare now offers “durable growth, technology-like profitability, attractive valuation and diversification benefits” compared with the AI-heavy market leadership, as quoted on Reuters.
Solid Dealmaking
M&A activity is surging. M&A value in the sector has touched nearly $284 billion this year, according to Dealogic, approaching 2025's total of $306 billion and topping every other year since 2021, as quoted on Reuters in August.
Pharma Stocks Entered H2 2026 On Firmer Footing
Large pharmaceutical companies entered the second half of 2026 on much firmer footing than they were a year ago. Concerns over tariffs and U.S. drug pricing policies have eased considerably, allowing investors to shift their focus back to company fundamentals.
Meanwhile, despite continued leadership changes at the Food and Drug Administration (FDA), drug approvals have remained healthy, with early indications pointing to a more flexible regulatory environment, per a Janus Henderson report.
Major Clinical Data Releases in 2026
Personalized mRNA cancer vaccine — Moderna and Merck: Their personalized mRNA vaccine, combined with Keytruda, met trial goals for reducing melanoma recurrence and preventing cancer spread compared with Keytruda alone. It could create a new oncology growth opportunity, although overall-survival data remain outstanding.
Retatrutide — Eli Lilly: In the TRIUMPH-1 trial, participants receiving the 12-mg dose lost an average of 28.3% of their body weight over 80 weeks. The results strengthen Lilly's potential position in next-generation obesity treatments.
Tezspire — Amgen and AstraZeneca Positive Phase 3: Amgen and AstraZeneca reported significant improvements in eosinophilic esophagitis, with sustained symptom relief and histologic remission through 52 weeks, potentially expanding Tezspire’s market beyond severe asthma.
Povetacicept — Vertex Pharmaceuticals: In the RAINIER trial, povetacicept reduced proteinuria by 49.8% versus placebo at Week 36, meeting the primary endpoint. The findings support its potential as a treatment for IgA nephropathy, a kidney disease that can progress to kidney failure.
Imdelltra plus Imfinzi — Amgen and AstraZeneca:The DeLLphi-305 trial showed a statistically significant and clinically meaningful overall-survival benefit when Imdelltra was added to Imfinzi for first-line maintenance treatment. The trial also met secondary progression-free survival and response-rate endpoints.
Bezuclastinib combination — Cogent Biosciences: The PEAK trial reported median progression-free survival of 16.5 months with bezuclastinib plus sunitinib versus 9.2 months with sunitinib alone. The results offer a potential treatment advance for patients with gastrointestinal stromal tumors previously treated with imatinib.
Encouraging Developments in the GLP-1 Market
Novo Nordisk's CagriSema delivered 25% average weight loss at 68 weeks among adult women in a new analysis conducted after a late-stage trial, with significant results across menopause statuses, potentially outperforming Wegovy, as quoted on CNBC.
CagriSema combines semaglutide, the active ingredient in Novo Nordisk’s Wegovy and Ozempic, with cagrilintide, which targets the amylin pathway to regulate hunger and fullness. The drug is expected to be launched in early 2027.
According to J.P. Morgan, only about 2% of the global obese population and 7% of diabetes patients currently receive GLP-1 treatments. Meanwhile, Gallup’s article published in mid-2026 found that the share of U.S. adults currently using GLP-1 medications for weight loss rose from 3% in 2024 to 11% in 2026. Together, these figures underscore the drug segment’s growth potential as treatment adoption expands.
ETFs in Focus
Against this backdrop, we have highlighted a few healthcare ETFs that have been hovering around a 52-week high lately.
Vaneck Biotech ETF (BBH - Free Report) – Up 30.8% year to date (as of Oct. 20, 2026)
Invesco Biotechnology & Genome ETF (PBE - Free Report) – Up 20.5% YTD
Global Healthcare iShares ETF (IXJ - Free Report) – Up 11.6% YTD
US Healthcare Providers iShares ETF (IHF - Free Report) – Up 24.7% YTD
S&P 500 Healthcare Sector SPDR (XLV - Free Report) – Up 15.7% YTD