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Thesis: Coming into 2020, health care sector stocks were dampened by concerns that the sector was an easy target for the populist impulses of both political parties in an election year, and that some version of price controls could follow. However, as the nation pulls together to battle COVID-19, health care stocks—especially biotechnology—are taking a leading role in providing solutions. In the near term, hopes of producing anti-viral treatments, vaccines, and testing kits for the COVID-19 virus will buoy these stocks. But perhaps more importantly, in the long-run, we believe biotechnology and other health care stocks will become less likely political targets, having proven their importance to society, which may support the multiple expansion that has been lacking over the past few years.
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