SECTOR PRESENTATION - HEALTHCARE Anthony Rogers, Thomas Rosol & Dylan Seymour
Agenda Overview Business Analysis Economic Analysis Financial Analysis Healthcare Industry Rogers, Rosol & Seymour Agenda Overview Business Analysis Economic Analysis Financial Analysis Valuation Analysis Recommendation
Healthcare is a $4.76T Sector Healthcare Industry Rogers, Rosol & Seymour Healthcare is a $4.76T Sector Source: Bloomberg; Fidelity
Industries Healthcare Industry Rogers, Rosol & Seymour Source: Fidelity
Healthcare Industry Rogers, Rosol & Seymour Companies Source: Nasdaq
Business Analysis Overweight Healthcare? The market appears to be heading to the phases of the life cycle where healthcare really shines. Source: Fidelity
Business Analysis Source: Fidelity
Business Analysis Substitutes (MED) Healthcare Industry New Entrants (LOW) Capital Intensive (R&D) Economies of Scale Patented processes and drugs Buyer Power (LOW) Specialization leaves buyer without options Supplier Power (LOW) Integration across the supply chain is unlikely Substitutes (MED) Generic drugs disrupt market once patents have expired Source: http://aimmarketinsights.com/
Business Analysis Catalysts Risks Demographics (aging population) ACA (more people insured) Higher drug prices M&A may combine synergies ACA (higher premiums) Government intervention (Decr. Prices) Expiring patients (more generics High R&D costs for drugs Loss of coverage for pre-existing conditions Source: US Census
Economic Analysis: Health Index & CPI – 5 yrs Source: Bloomberg
Economic Analysis: Health Index & UM Confidence– 5 yrs Source: Bloomberg
Health Index vs. $/£ – 5 yrs Economic Analysis: Health Index vs. $/£ – 5 yrs Source: Bloomberg
Financial Analysis: Source: Bloomberg
Financial Analysis: Source: Bloomberg
Financial Analysis: Source: Bloomberg
Financial Analysis: Source: Bloomberg
Valuation Analysis: Source: Fidelity
Valuation Analysis: Healthcare Industry Rogers, Rosol & Seymour Source: Bloomberg
Valuation Analysis: Health Index & SPX Index – 5 yrs Source: Bloomberg
Valuation Analysis Healthcare Industry Rogers, Rosol & Seymour Source: Fidelity
Valuation Analysis: Source: Bloomberg
Valuation Analysis: Source: Bloomberg
Valuation Analysis: Bollinger Bands Wider bands = greater volatility. Lines plotted at an interval around a moving average with two standard deviations. Used to determine overbought and oversold zones, to confirm divergences between prices and indicators, and to project price targets. Wider bands = greater volatility. Source: barchart.com
Valuation Analysis: Trend Spotter Computerized trend analysis system that uses wave theory, market momentum and volatility to find a general trend for a specific market. Attempts to cut losers early and let winners run. When there is a single dot above the price, this is a resistance point and represents a bearish trend. When there is a dot below the price, this is a support point and represents a bullish trend. When there are 2 dots, one above and one below the price, this represents a neutral or hold trend Source: barchart.com
Healthcare Industry Rogers, Rosol & Seymour Recommendation SIM Portfolio is currently weighted evenly with S&P at about 14.65% of the total portfolio We recommend OVERWEIGHTING Healthcare slightly at closer to 15% of the portfolio Potential: Aging population and Affordable Care Act (more covered by healthcare) Risks: Affordable Care Act (Loss of Coverage, Preexisting Conditions, Unaffordable) Industries: OVERWEIGHT – Healthcare Providers and Services (aging population is driving the amount of service demanded upward quickly) UNDERWEIGHT – Healthcare Equipment and Supplies (recent struggles earning positive returns)