APRIL RECAP & BEYOND

Healthcare sector performance, which was up roughly 1% for the month of April and flat to down over the year (-0.5%) remains in-line, to slightly outperforming the broader market.  Within the sector, Medtech again outperformed (+1.7%) for the month, behind Providers & Services (+7.1%), but still retained the top spot for YTD performance (+8.5%). Pharma (-1.3%) and Biotech (-1.4%) remain down for the month and the year-to-date.

MARKET COMMENTARY

Q1 Earnings Results Drove Performance
Stock performance was well correlated with Q1 results reported in April – with underperformance following weak or “just” in line quarters and upward stock movement following meaningful upside to expectations. Large cap performance was mixed on the heels of Q1 prints while for SMID Caps, performance was predominately based on revenue results, with greater allowance for small-caps reporting in-line numbers.

Capital Markets Activity Continues to Build
Equity market new issuances and follow-ons were down in April compared to last month, pausing as earnings season wrap up and volatility returns to the mid-teens, but remain up YoY. Healthcare equity offerings raised $89.9M, with one IPO and three FO offerings. In addition, seven M&A transactions were completed in the month. The pipeline of IPO candidates continues to build, setting the stage for a busy May and June of roadshows and offerings.

Broad Market Fundamentals Are Still OK
Equity strategists have opined that despite the ~10% decline in the S&P 500 (SPX), there is reason for continued optimism looking into the remainder of 2018 as broad market fundamentals remain intact. That said, concerns over inflation, rising rates and the potential for a global slowdown in growth has driven skittish sentiment over the short term.

Source: Thompson Reuters and FactSet