HCA, Express Scripts among healthcare stocks expected to win big from tax cuts

Certain stocks will benefit more than others from Republican-led tax plans, according to Reuters.

Both the House and Senate tax bills reduce the corporate tax rate from 35 percent to 20 percent. The House bill has this change taking effect immediately, whereas the reduction would occur in 2019 under the Senate bill.

UBS strategists project overall S&P 500 earnings would rise by 6.5 percent if the corporate tax rate falls to 25 percent, and climb by 9.5 percent if the rate falls to 20 percent, according to Reuters. Companies with primarily domestic business that pay nearly the full tax rate would benefit the most from the corporate tax rate reduction.

"Healthcare services is one of the most taxed industries and would be a big beneficiary of reductions in corporate tax rates," said Lance Wilkes, an analyst at Bernstein, according to the report.

The S&P 500 healthcare providers and services index, which includes hospital operators such as Nashville, Tenn.-based HCA Healthcare and health insurers like Indianapolis-based Anthem, gained 5.4 percent last week. Shares of HCA closed more than 6 percent higher Thursday after JPMorgan told investors how HCA could benefit from the Republican tax bill.

Other healthcare companies expected to win big under the tax plan include pharmacy benefit manager Express Scripts, lab testing company Quest Diagnostics and home healthcare provider Almost Family, Brian Tanquilut, a Jefferies analyst, told Reuters.

More articles on healthcare finance:

Trinity Health races to sell $889M in bonds ahead of tax changes
Insider selling: Interim CEO unloads $35M in Cerner stock
North Philadelphia Health System CEO to resign as part of cost-cutting plan

Copyright © 2023 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Whitepapers

Featured Webinars