{"id":263161,"date":"2025-10-31T16:10:11","date_gmt":"2025-10-31T16:10:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/263161\/"},"modified":"2025-10-31T16:10:11","modified_gmt":"2025-10-31T16:10:11","slug":"healthcare-stocks-could-be-poised-for-a-big-rally-morgan-stanley-says","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/263161\/","title":{"rendered":"Healthcare Stocks Could Be Poised for a Big Rally, Morgan Stanley Says"},"content":{"rendered":"

There’s a big opportunity in one area of the market for investors looking for a bargain: healthcare<\/a>.<\/p>\n

The sector looks poised to see a strong rebound despite a mixed performance so far in 2025, analysts at Morgan Stanley said in a recent episode on the bank’s “Thoughts on the Market” podcast. <\/p>\n

That’s due to a handful of catalysts that could boost the beaten-down corner of the market, according to Sean Laaman, a US small- and mid-cap biotech<\/a> analyst, and Terence Flynn, a US biopharma analyst, said.<\/p>\n

Healthcare stocks<\/a> have already gathered some momentum, despite an overall lagging performance so far this year. The iShares US Healthcare ETF climbed 2.9% over the month of October.<\/p>\n

Healthcare stocks in the S&P 500<\/a>, though, are up just 4.8% for the year, compared to the S&P 500’s 15.9% gain, according to data from Select Sector SPDRs.<\/p>\n<\/p>\n

There are a few reasons to think the uptrend will continue, Laaman and Flynn said. Here are some of the bullish factors they think could push the industry higher:<\/p>\n

Insulation from tariffs. “A number” of firms in the biopharma and biotech space have announced significant investments in US manufacturing in a broader attempt to reshore supply chains<\/a>. That could make the industry less exposed to tariffs, Flynn suggested.<\/p>\n

Eli Lilly<\/a>, for instance, said in early 2025 it would spend $27 billion to build new manufacturing plants in the US<\/p>\n

AstraZeneca<\/a> also said in July that it would plough $50 billion<\/a> to invest in manufacturing and research & development in the US.<\/p>\n

More clarity around drug pricing. President Trump signed an executive order this year that promised to slash prices of some prescription drugs<\/a> by as much as 80%.<\/p>\n

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Investors have been concerned over how the initiative will play out in the sector, but have gotten more clarity recently, Flynn said, pointing to some firms, like Pfizer<\/a> and AstraZeneca, that have reached an agreement with the administration on the matter.<\/p>\n

“We’re watching to see if additional agreements get announced,” he added.<\/p>\n

Wave of deal activity. There’s around $177 billion worth of patents that are set to expire in the large-cap biopharma space by the end of the decade, Laaman said.<\/p>\n

When the industry sees a big wave of expiring patents, that can put pressure on some companies to “continue to progress,” and be at the front of the competition by striking merger & acquisition<\/a> deals, Flynn said.<\/p>\n

Dealmaking in the healthcare sector saw a sharp decline over the first half of 2025, but there are some signs a rebound is already underway. M&A activity<\/a> in the space rose 7% over the third quarter, according to data from the healthcare intelligence firm LevinPro HC.<\/p>\n

AI catalysts. The use of artificial intelligence<\/a> could boost the healthcare sector in a few ways, Laaman said. He pointed to benefits like potentially faster recruitment for healthcare trials, or firms being able to file regulatory submissions faster.<\/p>\n

Stocks in the sector are cheap. When looking at the price-to-earnings multiple of companies, the healthcare sector is trading at about a 30% discount to the broader S&P 500, Flynn estimated.<\/p>\n

“Positioning to me still feels light here,” he added of investment flowing into the sector.<\/p>\n","protected":false},"excerpt":{"rendered":"There’s a big opportunity in one area of the market for investors looking for a bargain: healthcare. The…\n","protected":false},"author":2,"featured_media":263162,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[59],"tags":[6479,141742,141743,5019,97,252,253,141740,7263,3747,1535,7834,141741,7540,141744,141739,25,2394],"class_list":["post-263161","post","type-post","status-publish","format-standard","has-post-thumbnail","category-health-care","tag-tariff","tag-biotech-space","tag-catalyst","tag-firm","tag-health","tag-health-care","tag-healthcare","tag-healthcare-stock","tag-industry","tag-market","tag-morgan-stanley","tag-sp","tag-sean-laaman","tag-sector","tag-strong-rebound","tag-terence-flynn","tag-us","tag-year"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/263161","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=263161"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/263161\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/263162"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=263161"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=263161"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=263161"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}