Don’t get trapped in Healthcare stocks. The “day of reckoning” is coming according to Hedgeye Healthcare analyst Tom Tobin.
In the brief video excerpt above, from a recent call with institutional investors, Tobin responded to a subscriber’s question about when he might get bullish on the Healthcare sector again.
“We’re at the very beginning stages of a reckoning,” Tobin says, with Healthcare stocks -1.7% this year and the worst-performing sector in the S&P 500. This reckoning won’t bottom out until healthcare stocks are really underperforming the broader equity indices “by a mile,” he says. Before then, Wall Street consensus will be forced to cut sales and earnings per share estimates to reflect reality. The stock prices will have to fall.
Tobin might advise investors to get long Healthcare after first quarter earnings come out. By then, investors will hear management guidance for 2017 results. “That’s when the truth serum comes out,” he says. That’s when it could get really nasty.
Stay tuned.