The “beginning of the end” of the healthcare recession

0
29


CNBC’s Jim Cramer predicted Tuesday that the healthcare industry would rebound quickly after the industry fell into a significant downturn for the first time in its life.

” [A]If the country reopens gradually, there are certain industries that should do much, much better, “said the host” Mad Money “. As states begin to lift their locks, I think the beginning of the end of the healthcare recession has finally come. “

The coronavirus pandemic has strained hospitals across the country, with doctors canceling elective procedures and non-essential surgeries to free up resources for Covid-19 hospitalizations. The University of Michigan health care system, for example, announced Tuesday that it will lay off 1,400 workers and institute a hiring freeze as it faces a shortfall of $ 230 million over the course of the year. 2020.

Michigan Medicine is not alone, as hundreds of other hospitals, such as Stanford Health Care, have cut staff. The pain is felt in doctors ‘and dentists’ offices across the country, Cramer noted.

As government officials turn to boosting state economies and easing quarantine orders, investors can expect consumer demand to quickly return for medical services such as Botox, which belongs to Allergan, he said.

AbbVie, which is in the middle of a $ 63 billion deal to buy the specialty pharmaceutical company, could see a windfall in business, thanks to pent-up demand, said Cramer. AbbVie’s shares on Tuesday were less than $ 13 from its February close, before the coronavirus pandemic brought the market from a bull run to a bear market in about a month.

“But now these dermatologists are opening their doors and the pent-up demand is huge, which is exactly what AbbVie CEO Richard Gonzalez predicted during his excellent conference call last week,” said Cramer.

AbbVie announced a double beat in the first quarter on Friday. The drug maker saw total revenue grow 10% over the three-month period, but Wall Street expects revenues to drop in the June quarter.

Allergan is expected to publish its results next Tuesday. Analysts expect Botox sales to increase by almost 5% for the quarter ending in March and fall by double digits during the quarter, according to FactSet estimates.

The Dow Jones rose 133 points, or 0.56%, to 23,883.09, while the S&P 500 and the Nasdaq Composite both advanced about 1% in Tuesday’s session.

Stocks continue to rise as investors predict the US economy will reopen, although restrictions will remain. Cramer warned that these restrictions would be bad for many companies and could remain in place until a Covid-19 vaccine is available.

“The part of the market that works – healthcare, technology, life sciences, e-commerce – [is] so much so that it obscures the pain in travel, hobbies, banking, industry, retail [and] restaurants, “he said. “These losers always weigh us down, but on a day like today, it seems like they just don’t matter. ”

LEAVE A REPLY

Please enter your comment!
Please enter your name here