Healthcare space is greatly befitting from the current
favorable industry trends and robust performances by major drug
companies in both pharma and biotech segments. This trend is
further confirmed by the healthcare giant Johnson & Johnson's
stronger-than-expected results for the fourth quarter..
Johnson and Johnson Results in Focus
Earnings per share came in at $1.24, beating the Zacks Consensus
Estimate of $1.20 and improving from the year-ago earnings of
$1.19 per share.
Revenues rose 4.5% to $18.36 billion, trumping the Zacks
Consensus Estimate of $17.9 billion, despite the negative impact
from currency fluctuations. The robust performance was driven by
higher drugs sales and improved medical devices sales (read:
4 Ways to Play the Bullish Trend in Healthcare
However, the company guided lower for 2014 as it sees earnings in
the range of $5.75-$5.85 per share. Though this number is above
2013 reported earnings of $5.52 per share, it is slightly below
the Zacks Consensus Estimate of $5.87 per share.
The weak guidance led to the 2.5% slump in JNJ shares in early
hour trading but recovered slightly to down 1.1% at the close on
solid results. This mixed performance puts healthcare ETFs in
focus for the coming days, especially the funds having
double-digit allocation to this baby products and biological
Investors should closely monitor the movement in these funds and
could catch the opportunity from any surge in the JNJ pric. (see:
all the Healthcare ETFs here
ETFs in Focus
Health Care Select Sector SPDR Fund (
The most popular healthcare ETF on the market, XLV follows the
S&P Health Care Select Sector Index. This fund manages about
$8.7 billion in asset base and trades in heavy volume of roughly
5.7 million. Expense ratio came in at 0.18% annually. In total,
the fund holds about 57 securities in its basket. Of these firms,
JNJ takes the first spot, making up roughly 12.14% of the assets.
Pharma accounts for 45% share from a sector look while biotech,
healthcare providers and services, and equipment and suppliers
make up for double-digit exposure. The fund added 3.5% in the
year-to-date time frame and has a Zacks ETF Rank of 2 or 'Buy'
rating with a 'Low' risk outlook.
iShares U.S. Healthcare ETF (
This fund provides exposure to 114 securities by tracking the Dow
Jones U.S. Health Care Index. Here again, Johnson & Johnson
dominates the fund's return at 11.34% of total assets. In terms
of industrial exposure, Pharma takes the top spot at 48%, closely
followed by biotech (21%), medical equipment (17%) and healthcare
services (14%) (read:
3 Pharma ETFs Leading the Healthcare Sector
The product has amassed nearly $2 billion in its asset base while
charges 45 bps in annual fees. It trades in good volume of more
than 246,000 shares a day, suggesting a relatively tight bid/ask
spread. IYH gained 4.14% year-to-date and has a Zacks ETF Rank of
2 or 'Buy' rating with a 'Low' risk outlook.
iShares U.S. Pharmaceuticals ETF (
This ETF tracks the Dow Jones U.S. Select Pharmaceuticals Index,
giving investors exposure to the pharma segment of the broad
healthcare world. The fund holds 36 stocks in its basket with
Johnson and Johnson taking the top position at 11.48% (read:
A Comprehensive Guide to Pharma ETFs
The product has $594.8 million in AUM and charges 45 bps in fees
and expense. Volume is light as it exchanges just 21,000 shares
in hand a day. The fund is up 5.7% so far this year and has a
Zacks ETF Rank of 3 or 'Hold' rating with a 'Low' risk outlook.
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ISHARS-US PHARM (IHE): ETF Research Reports
ISHARS-US HLTHC (IYH): ETF Research Reports
JOHNSON & JOHNS (JNJ): Free Stock Analysis
SPDR-HLTH CR (XLV): ETF Research Reports
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