Bristol Myers and 4 Other Healthcare Stocks Are Bucking the Bear Market

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Even as the

S&P 500

has plunged into bear territory, healthcare stocks have been spared some of the carnage.

Seeking defense in the relatively high dividends and notionally recession-proof offered by larger healthcare companies, investors have snapped up large healthcare stocks this year. While the broader index is off 21% since its Jan. 3 high, healthcare stocks in the S&P 500 are down just 13.3%, as tracked by the

S&P 500 Healthcare sector index.

Of the nearly 80 stocks in the S&P 500 that have climbed since Jan. 3, 10 are healthcare stocks. We screened the S&P 500 for the five top-performing stocks stocks since Jan. 3.

What we came up with are a group of five stocks that investors have seen fit to bid up at least 10% even as a bear market has risen around them.

Company / Ticker	Jan. 3 price	Recent price	Change since Jan. 3 (%)
McKesson / MCK	$248.10	$306.99	23.7%
Bristol Myers Squibb / BMY	$61.88	$73.58	18.9%
Organon / OGN	$31.16	$34.20	9.8%
Vertex Pharmaceuticals / VRTX	$222.53	$245.39	10.3%
Merck / MRK	$76.87	$85.00	10.6%

Source: Factset

Those five stocks are the drug distributor

McKesson

(ticker: MCK), the big pharma firms

Bristol Myers Squibb

(BMY) and

Merck

(MRK), the large-cap biotech

Vertex Pharmaceuticals

(VRTX), and

Organon

(OGN), a recent

Merck

spinoff.

The biggest increase was at

McKesson
,

whose stock is up 23.7% since Jan. 3. Some of the investor enthusiasm for the shares could be due to the settlement announced in late February, under which McKesson, the nation’s other two large drug distributors, and

Johnson & Johnson

(JNJ) agreed to pay a combined $26 billion to settle the majority of the lawsuits they face over their alleged role in the opioid crisis.

That doesn’t fully explain the price jump, however. Shares of

Cardinal Health

(CAH), which is also part of the deal, are flat since Jan. 3;

AmerisourceBergen

(ABC) stock is up 7.5%. McKesson increased guidance for its 2023 fiscal year in May, while reporting earnings that beat expectations.

Bristol Myers and Merck, for their parts, are up 18.9% and 10.6%, respectively, since January 3. Both are attractive defensive plays, with high dividend yields of 3% and 3.3%, respectively. Bristol Myers in June announced a $4.1 billion acquisition of cancer-focused biotech

Turning Point Therapeutics

(TPTX), while Merck says that the pandemic’s impact on its business is lessening.

Vertex, meanwhile, is one of the few biotech stocks having a good 2022. The company has made a number of positive announcements this year on trial outcomes, including on its experimental gene therapy known as exa-cel, and a non-opioid pain medication known as VX-548.

Organon
‘s

climb since Jan. 3 comes after a rocky first year on the market. The company, which focuses on women’s health, began trading in June 2021; the stock closed that day at $37. It’s closed Jan. 3 at $31.16, and was down to a recent $34.20. The company has recently announced progress in its biosimilars pipeline, and reported what Piper Sandler analyst David Amsselem called a “clean quarter” in May.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com