Time for Pharma and Health ETFs?


TThe broader medical sector should now be in the spotlight on increased demand for the coronavirus vaccine as well as treatment as the Delta variant of COVID-19 fear increases. Apart from that, bullish earnings and a decent valuation should give the sector new impetus.

Optimistic profits, sales linked to Covid-19

Healthcare sector earnings expectations are optimistic as the sector is expected to register 14.6% growth in the second quarter of 2021 on revenue growth of 15.7%, according to earnings trends published on July 14, 2021.

A higher demand for drugs, tests and vaccines for COVID-19 is a plus for the industry. Roche’s first half net profit increases 2% to 8.22 billion Swiss francs (8.96 billion francs) and sales increased 8% at constant exchange rates to 30.71 billion francs better than expected.

Sales of the Diagnostics division grew 51% in the first half of the year due to strong demand for Covid-19 testing and strong momentum in routine testing, the drug maker said. This helped offset a 3% drop in sales of pharmaceutical products.

Johnson & Johnson (JNJ) has raised its overall revenue estimate for the year and forecasts $ 2.5 billion in sales of its COVID-19 vaccine while Pfizer and Moderna estimate $$ 26 billion and $ 19.2 billion in annual sales of their vaccines, respectively.

More recently, Moderna MRNA, known for its success in the COVID-19 vaccine, has entered the big leagues with its addition to the S&P 500 Index. Share has risen nearly 175% this year last week, leading to Moderna’s market valuation of over $ 115 billion (read: Moderna takes off for inclusion in the S&P 500: focus on ETFs).

Against this background, we present below a few healthcare ETFs that are hovering around an all-time high.

Focus on ETFs

Alphadex First Trust Healthcare ETFs FXH

The underlying StrataQuant Health Care Index uses the AlphaDEX stock selection methodology to select stocks for the Russell 1000 Index. Medical Equipment and Services (45.44%), Pharmaceuticals and Biotechnology (32.44 %) and healthcare providers (22.12%) are the top three holdings of the fund. The fund charges 61 basis points in fees.

ETF US Healthcare iShares IYH

The underlying Dow Jones US Health Care Index measures the performance of the healthcare sector in the US stock market. The fund charges 43 basis points in fees. Pharmaceuticals (26.02%), healthcare equipment (24.84%), biotechnology (16.63%), managed healthcare (11.42%) and science tools and services of life (10.19%) are the five main sectors of the fund (read: 2 sector ETFs oscillating around historic highs).

ETF Innovative Healthcare iShares Evolved in the United States IEIH

This ETF is active and does not track a benchmark. The fund seeks to provide access to US companies with innovative healthcare exposure, ranked using a proprietary rating system. The fund charges 18 basis points of fees (read: JNJ beats second quarter earnings, view up: ETFs to buy).

Biotech Vaneck ETF BBH

The underlying MVIS US Listed Biotech 25 index tracks the overall performance of companies involved in the development and production, marketing and sale of drugs based on genetic analysis and diagnostic equipment. The fund charges 35 basis points in fees.

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Moderna, Inc. (MRNA): Free Stock Analysis Report

IShares US Healthcare ETF (IYH): ETF Research Reports

ETF VanEck Vectors Biotech (BBH): ETF Research Reports

First Trust Health Care AlphaDEX ETFs (FXH): ETF Research Reports

iShares Evolved US Innovative Healthcare ETF (IEIH): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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