Healthcare surged in June. Raymond James is adding these two dividend payers to list of top picks
The healthcare sector, usually a sleepy corner of the market, rallied in June – and Raymond James added two rising stars to its list of top picks in the sector. The tech trade hit a rocky patch last month, with the group sliding 3% as traders shunned software names and the Magnificent Seven . Instead, investors piled into defensive corners of the market, lifting the healthcare sector by more than 6% in June. It also helps that healthcare names have generally been cheap versus hot tech names, strategists say. “Globally, healthcare has increased appeal and within the U.S. specifically, there are indications that themes reflecting accelerating growth are now as appealing as the long-running appeal of AI capex beneficiaries – especially from a generally cheaper and less well held starting point as earnings revisions turn positive,” said UBS strategist Gerry Fowler in a mid-June report. On Wednesday, Raymond James refreshed its own list of top healthcare picks with a pair of new stocks – and both happen to also pay attractive dividends. UnitedHealth Group The health insurance giant is having a big year thus far, up 28%. UnitedHealth is replacing Oscar Health on Raymond James’ list. “We are adding UNH to our top picks list as we see near-term upside from the company’s earnings report on July 16 amidst a backdrop of moderating medical cost trends and improving margins in its insurance business and Optum Health,” the investment bank said in a Wednesday note. Back in April, United Health posted first-quarter adjusted earnings of $7.23 per share on revenue of $111.72 billion, topping the FactSet consensus call for $6.58 and $109.43 billion. The insurer also forecast full-year adjusted earnings of $18.25 per share, up from earlier guidance of $17.75 a share. Raymond James anticipates “continued outperformance” from UnitedHealth. “All public data sources point towards a moderation in inpatient medical cost trend and pharmacy spend,” the firm wrote, adding that while the stock is off its March lows, “upward estimate revisions should support the stock.” UnitedHealth also raised its quarterly dividend 5% last month to $2.32 per share. The stock has a current dividend yield of 2.2%. More than three quarters (24 of 30) of analysts covering UNH rate it a buy or strong buy, according to LSEG, but the consensus price target has UnitedHealth falling 3% over the next year from current levels. Janus Living Raymond James also recommended senior housing provider Janus Living. Properties in this real estate investment trust’s portfolio include Cypress Village in Jacksonville, Fla. and The Fairfax in Fort Belvoir, Va. “We remain constructive on JAN’s pure-play seniors housing platform and the favorable growth setup supported by improving sector fundamentals, including recovering occupancy, limited new supply and supportive demographic trends,” Raymond James analysts wrote. Janus is poised to capitalize on growth opportunities, catching upside from improving margins across the portfolio and acquisition sourcing in a “highly fragmented market,” Raymond James said. Janus is a new entrant to public markets, having debuted on the New York Stock Exchange in March after a $20-per-share initial public offering that valued the company at $840 million. Janus ended Wednesday’s trading at $28.99 – up 45% from its IPO price. The stock pays a current dividend yield of 1.96%, and Janus is well liked on Wall Street, with 10 of 11 analysts rating it a buy or strong buy, according to LSEG. The consensus price target calls for only about 3% upside from where the stock is trading.
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