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Sound Advice: May 4, 2022

Are Health Care Stocks on the Mend? 

The two sectors that have provided the highest returns in years past have been technology and health care.  We discussed technology last week.  This week it’s health care’s turn and even though the pandemic has brought a renewed focus on health care, most of these stocks have also experienced weakness this year.

Let’s focus on Johnson & Johnson, Pfizer, and Moderna since they have been the leaders in development of Covid vaccines.  Although all three have been in high gear turning out hundreds of millions of doses, their stock market performances have been anything but consistent.

Last year, it was estimated that Pfizer and Moderna had over $50 billion in sales from their Covid-19 vaccines.  Johnson & Johnson had $2.4 billion in Covid vaccine revenues.   

Given those numbers, one might well have expected a significant upsurge in the shares of these companies.  But the net result was anything but.  For 2022 to date, J&J shares have risen 5.4% in contrast to Pfizer and Moderna, which dropped 18% and 43%, respectively, since January 1st.

Even if we measure the shares’ market performance over the latest year, the returns have been less than stellar.  The best showing was from Pfizer shares, which climbed 25.2%.  J&J and Moderna were down 1.5% and 20.3%, respectively, over the same period.

For health care stocks generally, the picture has been no better.  The leading exchange-traded funds from iShares and SPDR, which hold wide baskets of these stocks, both lost ground over the period.  The good news, however, is that they did much better than tech stocks.

Over the last two decades, the average returns from tech stocks have been more than double those of health care stocks and more than triple that of the market generally.  But don’t forget, the gains from tech stocks came along with considerable fluctuation.  Increases from the health care stocks were well above those of the market generally with far less dramatic volatility.

N. Russell Wayne, CFP®

Sound Asset Management Inc.

Weston, CT  06883


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