How Trumps Win or Lose will Affect Health-Care Stocks

Health-Care Stocks React to Presidential Election Outlook

Health-care stocks are experiencing significant movement as the presidential election draws near, particularly with UnitedHealth leading the charge with a 17% increase since June 27. The election's result could sway health-care stocks in various directions: a Trump victory may benefit Medicare Advantage carriers such as Centene and Humana, while a Democratic win could favor ACA-linked firms like Oscar Health. Analysts are optimistic about UnitedHealth with a target price of $647 and Centene at $94, signifying potential gains of almost 15% and over 43%, respectively.

The health-care sector usually faces challenges during election years but often rebounds in the second year post-election. Under the Biden administration, health-care stocks have underperformed by approximately 19%, and they typically fare better under Republican leadership. A GOP win could alleviate regulatory scrutiny and lower drug prices, but it might also terminate ACA subsidies, potentially leaving many uninsured individuals and negatively impacting hospitals and managed-care companies.

Conversely, a Trump triumph could be advantageous for Medicare Advantage carriers, offering relief from cost pressures. UnitedHealth, already performing well with a strong second quarter and cost-cutting measures, could see further advancements, as noted by Jefferies analyst David Windley. At the same time, a Democratic victory might lead to an extension of ACA subsidies, benefiting companies such as Centene, Oscar Health, HCA Healthcare, and Tenet Healthcare.

In essence, the outcome of the election will significantly influence health-care stocks, with clear victors and losers emerging depending on whether the GOP or Democrats hold power.

Key Takeaways

• Health-care stocks are volatile due to the presidential election, with UnitedHealth up 17% since June 27.
• A Trump win could boost Medicare Advantage carriers like Centene and Humana.
• A Democratic victory favors ACA-linked companies like Oscar Health.
• Analysts are bullish on UnitedHealth ($647 target) and Centene ($94 target), indicating potential gains of 15% and 43%.
• The health-care sector typically underperforms in election years but outperforms in the second year post-election.### Analysis

The forthcoming presidential election is a catalyst for health-care stock volatility, with UnitedHealth and Centene positioned for significant gains. A Trump win may strengthen Medicare Advantage providers like Centene and Humana by alleviating regulatory pressures and potentially reducing drug costs, although the end of ACA subsidies could impact insurance coverage and hospital profits. Conversely, a Democratic victory might extend ACA subsidies, benefiting ACA-linked insurers and hospitals. In the short term, election uncertainty depresses sector performance, while in the long term, regulatory shifts and policy changes will define sector trajectories, influencing investment strategies and company valuations.

Did You Know?

• Medicare Advantage:
• Medicare Advantage is a type of health insurance plan offered by private companies that contracts with Medicare to provide all Medicare Part A and Part B benefits to enrollees.
• These plans often include additional benefits like prescription drug coverage and vision or dental care, which are not covered by original Medicare.
• During a Trump presidency, these carriers might see increased enrollment and profitability due to potential policy changes favoring private insurance options over traditional Medicare.
• ACA (Affordable Care Act) Subsidies:
• ACA subsidies are financial assistance provided by the federal government to help lower-income individuals and families purchase health insurance through the Health Insurance Marketplace.
• These subsidies reduce the out-of-pocket costs for premiums and in some cases, out-of-pocket expenses.
• A Democratic victory could lead to an extension of these subsidies, making health insurance more affordable and potentially increasing the profitability of ACA-linked companies like Oscar Health.
• Health-care Sector Performance in Election Years:
• The health-care sector often experiences volatility and underperformance during presidential election years due to uncertainty over potential policy changes that could affect the industry.
• Post-election, the sector typically rebounds in the second year, reflecting a resolution of policy uncertainties and adjustments in investment strategies based on the new administration's policies.
• This pattern suggests that investors should consider the political climate and potential policy shifts when investing in health-care stocks, especially during election cycles.