Health Insurance Stocks Rally on Biden Campaign Comeback

Health insurers led U.S. stock market gains Wednesday after Joe Biden’s once-faltering Democratic presidential campaign was reanimated on Super Tuesday.

Wall Street looks on a candidacy of the former vice president more favorably than that of Senator Bernie Sanders, who has campaigned on the promise of Medicare-for-all, which poses the greatest threat to private insurers.

Biden favors building upon Obama’s Affordable Care Act, which could prove a boon to those with ties to government health-care programs. Insurers Anthem Inc. and UnitedHealth Group Inc. both had the biggest gain since Oct. 2008, climbing as much as 16% and 13% respectively.

Centene Corp. also climbed, rising as much as 17%, shaking off a disappointing 2020 forecast on Tuesday night. Citi’s Ralph Giacobbe opened a positive catalyst watch on the stock last night, calling Super Tuesday and the guidance a “clearing event” for Centene. Bernstein’s Lance Wilkes said insurers with ties to Medicaid and health-care exchanges should fare particularly well.

Humana Inc. and Cigna Corp. also posted double-digit gains, rounding out the top five performers on the S&P 500 Index Wednesday morning. EHealth Inc., a company with an online comparison tool for Medicare plans, rose as much as 9%.

The Health Care Select Sector SPDR Fund, known by its ticker XLV, rose as much as 4.4% after closing down yesterday. Goldman Sach has been calling for a relief rally for the sector despite options trading pointing to a bearish outlook. XLV had lost nearly 10% from its Jan. 22 record before today.

Biden’s sweep on Super Tuesday “will spur positive returns across the health-care insurance peer group” as well as other closely tied sectors that the Sanders campaign had been targeting, said Jared Holz, a health-care strategist at Jefferies.

The Democratic contest remains a “a fluid situation,” Holz said. He added that “this week has already proven, major shifts in campaign forces can occur in a blink.”

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