Factory Daily letter

Latest edition · September 23, 2026

Healthcare Back in from the cold

Following an extreme period of underperformance, global healthcare is normalising as earnings revisions rebound to their highest levels since 2021. US healthcare is establishing a relative technical base while European healthcare trades at an attractive historical valuation discount.

Healthcare is demonstrating signs of cyclical normalisation following a prolonged period of lagging tech-led equity markets. Earnings revision momentum has recovered to its highest level since 2021, bridging the fundamental disconnect between sector performance and resilient corporate earnings. While US healthcare has closed much of its valuation discount to trade at 18.4x next-twelve-month earnings, European healthcare remains discounted at 15.3x. Approaching US midterm elections present historically favourable post-election return profiles under both House control scenarios, and a broader sector recovery is poised to provide a material tailwind for heavy-weight benchmarks like Switzerland's SMI.

Key takeaways from the latest edition

• 1.Healthcare is emerging from historic underperformance, driven by resilient earnings revisions reaching their highest levels since 2021 and normalising relative valuations.
• 2.Valuation profiles diverge regionally: US healthcare trades rich versus its 10-year average at 18.4x NTM P/E, whereas European healthcare remains at an absolute discount at 15.3x NTM P/E.
• 3.Historically, US midterm election shifts in House control matter more than the Senate for healthcare performance, with Republican control delivering reliable short-term gains (100% positive at Day 125) and Democratic control yielding stronger Day-250 gains (25.5% average).

What this series covers

• Relative trends: US Health Care basing, Europe still correcting
• Global healthcare: From capitulation to normalisation
• Healthcare's historic underperformance has largely unwound
• The recovery has coincided with improving earnings revisions
• US healthcare lagged despite improving earnings revisions
• Europe shows a similar fundamental disconnect
• Sentiment has weighed on European names too
• US healthcare's valuation discount has largely closed
• Europe: valuation still below its long-run norm
• Healthier global healthcare could support the SMI
• Do the midterms matter? House control has historically mattered more than Senate control for healthcare returns
• Democratic House: stronger late-cycle performance
• US Health Care (ST): 50-day SMA coincides with a potential wave-4 low
• STOXX Europe 600 Health Care (ST): Recovery from support faces major resistance
• Screening US healthcare
• Screening EU healthcare

Edition archive

• Healthcare Back in from the cold

  September 23, 2026

• September seasonality

  September 2, 2026

• Q2 review Strong results, higher expectations

  August 28, 2026