Sen. Bernie Sanders' "Medicare for All" proposal could be a big blow to health insurers if he becomes president, but his win in the New Hampshire Democratic primary Tuesday is helping boost healthcare stocks.
The reason is simple: Some see Sanders' ascension as a good thing for the re-election chances of Donald Trump and therefore a no-go for Sanders' healthcare plan.
Shares of UnitedHealth (UNH) - Get Report were rising 3.33% to $300.46 and Cigna (CI) - Get Report gained 3.11% to $221.82. Humana (HUM) - Get Report rose 4.3% to $372.45, Anthem (ANTM) - Get Report gained 3.7% to $290.25, and Centene (CNC) - Get Report rose 3.47% to $65.92.
Raymond James said in a note that Sanders will have a tough time getting past President Trump due to Sanders' position on the far left of the political spectrum.
“The conventional wisdom has been that a Sanders surge would be bad for markets. However, the market seems to view the current state of affairs as a win-win-win scenario,” the note said.
The first win for markets, according to Raymond James, is that a Trump re-election is positive for stocks.
The second win is that a "Sanders nomination/contested convention increases the likelihood of a Trump victory and potentially even an all-Republican government, also a positive for stocks.”
The third win, according to Raymond Hames is that a "moderate candidate emerging as the nominee ... is also viewed as a win. Although Trump may lose going up against an established moderate candidate, it’s a comparatively positive result as the new president’s policies would not be outside the norm.”
When taking all of this into account, Sanders’ primary victories could have the opposite market effect than expected.
“The building Sanders surge could produce the opposite reaction than the negative reaction initially anticipated (unless another macro event changes the narrative),” Raymond James note said.