The Covid-19 pandemic has affected stocks across the board, creating winners in gaming and online retail, and losers in transportation, hospitality and many other areas.
So, what about the sector closest to the crisis: healthcare?
The most obvious winner is the biopharmaceutical space, said Michal Marszal, senior equity analyst, healthcare, at CIBC Asset Management.
The urgency for a vaccine has created massive demand and willingness to fund the companies developing cures and treatments, he said in an April 22 interview.
Results from vaccine trials have contributed to markets moving up and down this month, and individual companies have seen wild swings. Massachusetts-based Biotech company Moderna saw its stock rise 30% last week after announcing positive trial test results, though its stock price subsequently fell.
Last month, California-based Gilead Sciences saw similar movement in its stock after the company said its antiviral drug remdesivir helped improve outcomes for patients with Covid-19 in a clinical trial.
Marszal gave examples of other healthcare services companies that are thriving during the pandemic. Tele-health companies, and those delivering remote diagnostics and managed care, would benefit from extended lockdowns, he said.
“A lot of major players in the United States in managed care, such as CVS or UnitedHealth, are actively exploring adding these types of services to the menu of offering to their clients,” said Marszal, who co-manages the CIBC Global Technology Fund and the Renaissance Global Science and Technology Fund.
U.S. companies in the managed care space that are exposed to government programs are also benefiting, he said.
“Companies that are highly exposed to Medicaid here — for example, Anthem — will be the beneficiaries,” he said. “From an investment perspective, that is a fairly good hedge against a potential macro-economic downturn.”
However, the pandemic is also hurting some healthcare companies by dampening demand for elective procedures, medical devices and diagnostic tests. Laboratories, hospitals and clinics that rely on profits from elective procedures are being negatively affected by lockdowns.
“The manufacturers of medical devices, especially some of those that are exposed to the orthopedic space, would see a substantial drop in demand for their product,” he said, referring mainly to developed countries.
This article is part of the AdvisorToGo program, powered by CIBC. It was written without input from the sponsor.