Large-Cap Healthcare Valuations Attractive Once Again, Says RBC

Large-cap healthcare firms are attractively valued once again compared to the broader equity market, according to RBC Capital Markets U.S equity strategy head Lori Calvasina.

Speaking at RBC's healthcare conference on Thursday, Feb. 22, in New York City, Calvasina noted this hadn't been the case for a year. Valuation was calculated on an enterprise value to Ebitda basis. 

Meanwhile, small-cap healthcare companies look overvalued relative to the broader small-cap universe as well as their large-cap peers on an EV to Ebitda basis, Calvasina said.

Discussing the stock market in general, Calvasina said she remains bullish despite the recent market declines and volatility. She has a year-end 2018 S&P 500 price target of 3,000 and EPS of $155.

The S&P 500 index finished at 2,703.96 on Thursday, up 0.1%.

RBC has a market weight stance on the healthcare sector. It is overweight financials, industrials and energy and underweight real estate, staples and utilities.

Also at the conference, RBC Capital Markets chief U.S. economist Tom Porcelli reiterated RBC's longstanding forecast that the Federal Reserve will raise rates four times this year. RBC expects another four rate hikes in 2019.

 

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