NEW YORK, Jan 15 (Reuters) - Healthcare stocks could rise next week if Republicans pull off a shock victory in Tuesday's Massachusetts Senate election that endangers U.S. healthcare reform, analysts and investors said on Friday.
A victory by State Senator Scott Brown may bode well for the shares of healthcare companies, including health insurers, which have been under siege by an overwhelmingly Democratic U.S. government.
The health care companies must be chomping at the bit. After spending millions lobbying against health care legislation, including taking the fight all the way to state legislatures, it looks like the health insurance companies could be on the verge of a historic upset victory. Several analysts told Reuters that health insurers could be the biggest gainers in a Republican victory.
Investors may have been reading the polls on Friday as even as the overall market tanked 1% today, WellPoint (WLP) was up 0.7%, Cigna (CI) was up 0.2%, and United Health (UNH) was up 1.3%.
But David Heupel, portfolio manager at Thrivent Investment Management, said health insurer stocks could rise another 5 percent.
Tim Nelson, a healthcare analyst with First American Funds, said health insurers stand to be the biggest gainers in a Republican victory.
If Brown wins, "multiples could expand really across the board," Nelson said. "But that has be tempered by the magnitude of his victory and a lot of logistical issues that will then move to the forefront.
"They'll all go up in anticipation this will mean the death of healthcare reform, but that's not guaranteed."
Kim Monk, a healthcare analyst with Capital Alpha Partners said the election "could have huge implications for health care reform", while Ira Loss, an analyst with Washington Analysis while "People expect the stock market to move higher (on a Republican victory), but I'm not sure that's true," Loss said.
"I don't think Brown's win would change the outcome of reform. It's one person arriving late."
http://www.reuters.com/...
UPDATE: Some are saying the health insurance companies also benefit from the Senate bill. The question is compared to what. Marketwatch tells us what the game is with health stocks this year:
While some of this remarkable performance is due to the overall S&P 500 index hitting its own new annual highs this week, analysts and reform advocates say the performance of these companies over the last few months can be partly attributed to the diluting of proposals for overhauling the nation's health-care system.
Some of it also may be due to a market overreaction that occurred when Congress first started tackling the issue, says Les Funtleyder, health-care analyst for Miller Tabak & Co., and author of "Healthcare Investing: Profiting From the New World of Pharma, Biotech and Health Care Services."
"Reform won't be as bad as people think because people have a tendency to misprice risk," Funtleyder said. "In this case, it got mispriced to the lower side."
Link
As I commented, it's very simple: Progressive bill > Senate bill > Nothing.
e.g.,
Nader 2000 > Gore 2000 > Bush