Wall Street continued to batter health care stocks last week, especially the health insurance names, which erased tens of billions of dollars in market value.
What we're hearing: People are citing fears of "Medicare for All" as the driving force behind the sell-off, although it’s not as simple as that. Regardless, many stock analysts are imploring investors to ignore the Democrats' health care plan.
- "Health care lawmaking is difficult, and change occurs infrequently," wrote Spencer Perlman, director of health care research at Veda Partners. "This is not a bug in the American political system, it is its design. Enacting a wholesale change of the American health care system is highly unlikely, and we urge investors to follow the M4A debate with a wary eye."
- "It's a once in a decade opportunity to get high-quality names at these depressed multiples," analysts at SVB Leerink said of health insurers, adding that if a Democratic supermajority could not pull off M4A in 2009, then the chances of it happening this time are "overblown."
- Gary Taylor of J.P. Morgan wrote to investors that insurance stocks likely will fall even further as part of a broader market correction, but they could improve a lot if "[Joe] Biden wins the Democratic nomination without changing his current view against single-payer."
The big picture: The stock prices of 5 of the largest health insurers (Anthem, Centene, Cigna, Humana and UnitedHealth) still have all vastly outperformed the broader stock market since the Affordable Care Act was enacted in 2010.
Late breaking: UnitedHealth filed its annual proxy statement late Friday.
- CEO Dave Wichmann, who railed against M4A during the company's earnings call last week, made $21.5 million in 2018 compared with $83.2 million in 2017.
- Stephen Hemsley, the former CEO who sits as UnitedHealth's executive chairman, made $66 million in 2018 compared with $27.2 million in 2017.