Health sector themes to watch in 2024

The health-care sector has wiped out much of its losses for the year during the December market rally. Beaten-down biotech and medical device makers have seen the biggest rebound this month, and analysts see that momentum continuing in the new year.

Still, analysts and strategists have a mixed outlook for the sector in 2024.

“We’re entering the year as an underweight,” said Sam Stovall, chief investment strategist at CFRA. “There’s a lot of overhead resistance, and they have to work through that overhead resistance because a lot of investors might say, ‘let me get out and move on to something that has better growth potential.'”

The second week of January could bring some big moves for health-care names, when companies present at this year’s JPMorgan health-care conference in San Francisco. It is one of the year’s largest health-care gatherings of major industry CEOs, and companies often provide updates on earnings guidance and clinical trial research during the conference.

The political calendar could pose one of the biggest challenges. The S&P 500 health-care sector has lagged the S&P 500 in four of the last six presidential cycles. Increased regulatory focus on drug prices could result in another year of underperformance.

The S&P 500 health-care sector remains on pace for a second straight annual loss, dragged down by Covid vaccine makers Moderna and Pfizer, which have fallen more than 40% for the year. Eli Lilly, up more than 55% for the year, is the sector’s biggest gainer, fueled by demand for its diabetes and obesity drugs.

Here’s a look at which parts of the health industry analysts see facing continued pressure in 2024, which will get some relief, and which beaten-down names are getting investors’ votes for a rebound next year: