NEW YORK (Reuters) – Investors are diversifying bets in the healthcare sector, as the rush to develop treatments for Covid-19 has driven up prices for some pharmaceutical stocks.
FILE PHOTO: Floor traders work space is seen on the trading floor after the closing bell, following traders testing positive for Coronavirus disease (COVID-19), at the New York Stock Exchange (NYSE) in New York, U.S., March 19, 2020./File Photo
A record 48% of fund managers are overweight healthcare stocks, a BofA survey showed, and the S&P 500 healthcare sector is up nearly 34% since its March low. Hopes for a treatment have also sparked outsize rallies in the shares of companies such as Moderna and Inovio Pharmaceutcials, up 242% and 3331% since the start of the year, respectively, as of Thursday’s close.
In recent weeks, news of potential treatments or vaccines to fight the pandemic have occasionally fueled swings in broader markets.
Yet some fund managers believe lasting profits may be elusive for vaccine-makers, leading them to seek corners of the healthcare sector that could see longer-term benefits from the fight against coronavirus.
Large pharmaceutical companies such as Johnson & Johnson(JNJ.N) and GlaxoSmithKline Plc (GSK.L) have said they plan to make any successful vaccine available at cost, though they could reap profits later if a seasonal shot is needed. Multiple treatments could also divide the market between many players, investors said.
“There’s the question of ‘Does anyone really make a lot of money on this?,” said Larry Cordisco, co-portfolio manager of the Osterweis Fund.
Signs of progress on potential treatments could bolster the