Cases of the flu have reached elevated levels as of late. This could keep healthcare stocks and ETFs with a healthcare focus on the radar for traders.
“Nationally, seasonal influenza activity remains elevated and is higher than or similar to the highest it has been all season for each indicator reported in FluView,” reported the CDC. “In addition, the percent of specimens testing positive for influenza at clinical labs and the rate of laboratory confirmed influenza associated hospitalizations reported to FluSurvNet are higher than any peak week going back to the 2015-2016 and 2010-2011 seasons, respectively.”
From a market perspective, Barron’s noted that “a really bad flu year could scramble earnings expectations for testing companies, retail pharmacy chains, and for health insurers, as investors tweak estimates to reflect a surge in respiratory infections.” A potential sign of market strength in health care is the Nasdaq Health Care Index. The index is up just over 6% for the year.
“Folks, postpandemic, are more so looking though these one-time (outbreaks)” said Andrew Brackmann, an analyst at investment firm William Blair. “You don’t get as much credit on the upside. You do on the downside.”
Brackmann also noted that health care companies that have already reported Q4 earnings could have been modest in their forecasts.
“The companies that reported [fourth quarter earnings] earlier in the cycle, late January, they were still assuming it was going to be more like a normal flu season,” Brackmann added. “What you’re going to start to hear throughout this quarter is ‘Hey, this is not a normal season anymore.’”
2 Leveraged Options
As mentioned, greater demand for healthcare services can open the pathway for trading opportunities. Consider this pair of leveraged funds from Direxion. Both offer the potential to maximize profits with 300% leverage.
First is the Direxion Daily Healthcare Bull 3X ETF (CURE ), which seeks daily investment results equal to 300% of the daily performance of the Health Care Select Sector Index. The index includes domestic companies from the healthcare sector. These include pharmaceuticals, healthcare equipment and supplies, healthcare providers and services, biotechnology, life sciences tools and services, and more.
Biotech companies could also see interest. One name that has been circulating is Moderna, which got a $590 million injection of capital last month to develop a bird flu vaccine.
Moderna is one of the holdings found in the Direxion Daily S&P Biotech Bull 3x Shares (LABU ). The fund seeks daily investment results equal to 300% of the daily performance of the S&P Biotechnology Select Industry Index.
For more news, information, and analysis, visit the Leveraged & Inverse Channel.
