The S&P 500 healthcare sector suffered minimal damage in Tuesday's broad-market selloff. The sector retreated Wednesday with the market -- but, as of Wednesday's close, the group is down only fractionally for the past week. Year to date, big-cap healthcare is down 0.5%, outperforming financials, consumer discretionary, technology and energy.
Naturally, attention has been focused on UnitedHealth Group (UNH), which joined the Dow industrials this week. As index-fund managers shuffled shares last week to mirror the shift, UnitedHealth rose 3.6% in heavier-than-average turnover. The stock is outpacing its index this week, having edged down 0.7% as of Wednesday's close. The Dow, meanwhile, has slumped 1.2% so far this week.
Thus far in 2012, UnitedHealth has advanced 10.1%, closing Wednesday at $55.78. The company confirmed plans to report its third quarter on Oct. 16 before market open.
Yet, if we glance at other S&P healthcare names, we see several names that are outgunning UnitedHealth on a year-to-date basis.
Pharmaceuticals and biotechs, in particular, have been among sector standouts. Gilead Sciences (GILD) has been on a tear lately, and is working on its fourth consecutive month of gains. The stock has advanced 61.4% in 2012, ending Wednesday's session at $66.06.
Even before it vaulted 9.3% last week, the stock had been rising on a few developments that had spurred optimism. Namely, Deutsche Bank and J.P. Morgan raised price targets on the stock, citing potential for HIV drug Stribild, which got the nod from regulators last month.
In addition, the company presented at UBS Global Life Sciences Conference last week. Such investment-banking conferences often result in boost for a stock as analyst get information about the firm's upcoming initiatives. Further, Jim Cramer mentioned that conference on air last week, noting that he saw further upside potential in Gilead, among other biotech names.
Gilead's technicals appear healthy, but the stock is a bit extended at the moment. Shares closed Wednesday slightly beneath their five-day exponential average, and could use a little time to consolidate all the recent gains before they're buyable again.
A large-cap growth name I've written about previously -- and a S&P 500 component -- is Alexion Pharmaceuticals (ALXN). The company makes treatments for autoimmune diseases, cancer and other ailments.
Alexion is up more than 56% year to date, having closed Wednesday at $111.96. This is one of those fairly unusual stocks that attracts investors seeking a large-cap, benchmark-index component, as well as those seeking a fast grower. It meets many of the classic fundamental and technical metrics that momentum investors seek: Earnings have risen at rates of 45% or more in every quarter of the past two years. Revenue rose 41% or more every quarter.
Looking ahead, analysts are eyeing an earnings increase of 37% this year, and 39% in 2013.
The stock has been trending along its 10-week moving average since a brief dip below that line in May. It rallied to an all-time high of $116.43 Tuesday, bucking the general market's downside reversal. It succumbed to the downdraft on Wednesday, however, closing 0.8% below its five-day line.
As with UnitedHealth and Gilead, Alexion is extended from a buy point at the moment. A consolidation of several weeks could wipe away some of the froth, and present a new technical entry point.
