A Houseful of Democrats? No Problem by Vito J. Racanelli
Highlighted companies: Abbott Laboratories (ABT), Johnson & Johnson (JNJ)
Summary: Last week's Democratic victory sent healthcare stocks tumbling due to fears of a political effort to lower prescription-drug prices for drugs attained through Medicare. Healthcare suppliers fell 6.6%, pharmaceuticals 3%, and managed health 2.6%. The Trader column submits that the present price decline may present a buying opportunity. The premise: What can the Democrats actually do to the industry at this juncture? With a one-vote Senate majority and President Bush's veto power, Republicans still wield substantial pull, making real change far less likely than its threat. Furthermore, historically healthcare stocks underperform before, and outperform after elections. Two "healthy" companies that the Trader looks toward for a post-election bounce: Abbott Laboratories (ABT) and Johnson & Johnson (JNJ).
Quick comment: Commentary: Barron's Post-Election Sector Analysis • Democrats Are Not Bad For The Market • Medicare Enrollment Triples Humana's Q3 Profit • Investing in Pharmaceuticals Via ETF