Jared Holz, a healthcare sector specialist at Mizuho, says the outlook for the healthcare sector is uncertain due to likely gridlock between lawmakers as Democrats prepare to take over Congress. Speaking on CNBC’s "Fast Money" on Wednesday, Holz stated that he does not see significant developments in the sector for the next couple of years.
Valuation concerns shift focus to medtech
Holz noted that pharmaceutical stocks are trading more expensively than tech stocks for the first time in 20 years. Citing these elevated valuations, he advised backing away from pharma and looking at medtech instead. He expressed skepticism about overturning recent regulations in the near term but suggested that if regulatory changes do occur, investors should consider being long on medical device stocks that are at or near multi-year lows.
According to Holz, healthcare’s real booster shot may come if a Democrat wins the White House in 2028, leading to a rollback of Trump strategies. He said that is where healthcare could actually perform well.
Recent market performance
The State Street Health Care Select ETF (XLV) increased by 3% one day after Election Day, though healthcare stocks were affected by a Wall Street sell-off on Thursday. The ETF ended virtually flat for the week. Since President Trump took office in January 2025, the fund is up around 32%, beating the S&P 500 by almost 9 percentage points.
