Money managers under the microscope
from Reuters Money:
The following column is by Tom Roseen, senior analyst for Thomson Reuters.
Third-quarter earnings reports and advance guidance have been fairly good, according to our Thomson Reuters Proprietary Research team. With 58 percent of the healthcare constituents of the S&P 500 reporting thus far, 86 percent have beaten their consensus earnings estimates.
And with the 2010 mid-term elections finally in the history books, the political and regulatory risks for the sector may have receded—at least slightly—with Republicans’ taking over the House and making inroads in the Senate. The ambiguity surrounding healthcare reform had dampened the performance of these stocks. Investors have been concerned about the heightened regulatory scrutiny of the healthcare industry, and there have been mixed views about the impact the legislation would have on healthcare firms’ profitability and margins.
The sector was also hurt by the recession. Healthcare is considered a defensive play during downturns – after all, people can’t forgo critical care, delay the delivery of that new bundle of joy, or discontinue life-prolonging medication. But we know from firsthand experience that families will often put off a physical exam, purchase a generic brand of medication, or delay elective procedures when times get tough.