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CIO Strategy BulletinArticle14 Jan 2024

Having Missed the ’23 Rally, Healthcare Remains “On Sale”

CIO Strategy Bulletin

Early indicators of market activity are setting the stage for a broader sector recovery this year, especially in areas that were most beaten down in 2023.

Key takeaways from this week's bulletin:

  • Just two weeks into 2024, the healthcare sector has shrugged off the title of being a notable laggard in 2023. In contrast to the previous year’s sluggish 0.3% return (vs 24.2% S&P 500), healthcare now leads the performance chart among all the other sectors year to-date, boasting a 3.0% return (vs -0.3% S&P 500).
  • As we noted in our Wealth Outlook 2024, tighter financial conditions, regulatory uncertainties, the glut of inventories post-COVID and investor fear that GLP weight-loss and diabetes drugs will negatively alter demand for other health care modalities have been the culprits behind a rare healthcare earnings recession.
  • Our view is that the new generation of GLP-1 drugs are not substitutes for other treatments and procedures but are likely to function as a complement that will help drive better health outcomes and market performance for selected shares.

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