Healthcare stocks may struggle to gain momentum as Democrats prepare to take over Congress.
Jared Holz, who covers health care for Mizuho, said the sector’s outlook was uncertain because of possible gridlock among lawmakers.
“The next couple of years I really can’t see too much happening,” the company’s sector specialist told CNBC’s “Fast Money” Wednesday. “I’m not sure you want to own them all, but you can pick and choose names … Pharma is trading more expensive than tech for the first time in 20 years. So, I’m pulling out of pharma. I’m going to look at medtech.”
At State Street Health Care Select ETF (XLV) jumped 3% the day after Election Day.
“You have a very strange situation where you don’t usually have all these categories together, and they do.. So, I think some things are just a little bit off,” Holz said, a day before health care was swept up in Thursday’s Wall Street sell-off.
According to Holz, a real health booster shot could happen if Democrats win the White House in 2028.
“Then I think you see some of Trump’s strategy coming back. That’s where I think healthcare can really do well,” said Holz, who added that Democrats hold the Senate and the House.
For investors long on healthcare, Holz says each subsector should be treated differently.
“Can we get some of the regulations that have taken place over the past couple of years and overturn that through the near term? I don’t have to believe it,” said Holz. “But if you do, then you might want to go long on some medical device stocks that are at or close to many years.”
At State Street Health Care Select ETF finished almost flat this week. That’s up about 32% since President Trump took office in January 2025 — a beat S&P 500 by almost 9 percentage points.