healthcare -sector presentation - health care...healthcare -sector presentation 02/25/2014 ......

HealthCare -Sector Presentation 02/25/2014 By Le Zhao, Stephanie Zimmerman,

Xiongyi Zheng and Zhen Zhang

Agenda

Overview

Sector

Weights

Key Players

Relation with S&P 500

Financial Analysis

Business Environment

ACA

Recommendation

Overview

Fundamentals AS OF 02/21/2014

Market Cap $4.13T

P/E (Last Year GAAP Actual) 31.92

P/E (This Year's Estimate) 29.46

Enterprise Value $97.00B

EPS (TTM) $2.79

EPS Growth (TTM vs. Prior TTM) -48.13%

Revenue Growth (TTM vs. Prior TTM) 28.16%

Return on Equity (TTM) 16.63%

Return on Investment (TTM) 10.19%

Total Debt/Equity (TTM) 56.57

Dividend Yield 2.42%

Sector

28%

72%

0% 20% 40% 60% 80%

Health CareEquipment &

Services

Pharmaceuticals &Biotechnology

Health Care Industry

12%

12%

4%

21%

51%

0% 10% 20% 30% 40% 50% 60%

Health Care Providers

Medical Equipment

Medical Supplies

Biotechnology

Pharmaceuticals

Health Care Sub-Industry

Weights

CONS DISCRET

12.32%

CONS STAPLES

9.46%

ENERGY

10.13%

FINANCIALS

15.92%

HEALTH

CARE

13.75%

INDUSTRIALS

10.72%

INFO TECH

18.93%

MATERIALS

3.52%

TELECOM SERV

2.23% UTILITIES

3.03%

Weights in S&P 500

CONS DISCRET

13.24%

CONS STAPLES

9.47%

ENERGY

8.91%

FINANCIALS

15.83%

HEALTH

CARE

14.04%

INDUSTRIALS

8.69%

INFO TECH

20.30%

MATERIALS

3.05%

TELECOM SERV

1.20%

UTILITIES

3.43% Cash

1.78% Dividend

Receivables

0.06%

Weights in SIM

# Name Ticker MktCapUSD

1 Johnson & Johnson JNJ US 258.56B

2 Pfizer Inc. PFE US 204.02B

3 Merck & Co. Inc. MRK US 160.82B

4 Gilead Sciences Inc. GILD US 126.90B

5 Amgen Inc. AMGN US 93.13B

6 Bristol-Myers Squibb Company BMY US 88.22B

7 AbbVie Inc. ABBV US 81.44B

8 Biogen Idec Inc. BIIB US 77.64B

9 UnitedHealth Group Incorporated UNH US 72.76B

10 Celgene Corporation CELG US 66.18B

Key Players

Relation with S&P 500

Correlation=0.97

-50.00%

-30.00%

-10.00%

10.00%

30.00%

50.00%

70.00%

90.00%

110.00%

130.00%

150.00%

S&P 500 Index (^SPX) - Index Value S&P 500 Sector Indices - Health Care Sector Index (^HCX) - Index Value

Regression Detail

HCX=-0.107234669979407+1.07148688439782*SPX

SUMMARY OUTPUT

Regression Statistics

Multiple R 0.969289849

R Square 0.939522811

Adjusted R Square 0.939475966

Standard Error 0.077901167

Observations 1293

ANOVA

df SS MS F Significance F

Regression 1 121.7110218 121.7110218 20055.89172 0

Residual 1291 7.834552127 0.006068592

Total 1292 129.5455739

Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%

Intercept -0.10723467 0.003893602 -27.5412542 9.8399E-132 -0.11487315 -0.09959619 -0.11487315 -0.09959619

X Variable 1 1.071486884 0.007565992 141.6188255 0 1.056643897 1.086329872 1.056643897 1.086329872

Financial Analysis – ToRe1yr Total Return 1 Year Average Median Std Dev High Low

All Sectors 30.49 14.95 77.4 622.39 -100

Basic Materials 21.54 -0.59 58.55 225 -99.87

Consumer Goods 24.12 13.58 73.3 400 -99.63

Consumer Services 35.46 21.28 79.22 616.67 -100

Financials 24.48 13.28 76.44 860 -99.99

Health Care 51.48 18.17 88.04 398.69 -100

Industrials 30.13 18.36 56.63 257.14 -100

Oil & Gas 16.28 5.31 70.16 449.59 -98.13

Technology 36.9 19.72 88.88 575 -99.97

Telecommunications 16.28 18.55 105.64 466.15 -99.61

Utilities 15.15 12.79 19.3 80.28 -60.62

Total Return 1 Year Average Median Std Dev High Low

Health Care 39.88 30.83 31.68 116.34 -24.44

Pharmaceuticals &

Biotechnology 48.22 49.22 46.19 158.61 -11.34

Health Care Equipment &

Services 30.4 25.31 23.63 74.13 -24.44

Financial Analysis – ToRe 3m Total Return 1 Quarter Average Median Std Dev High Low

All Sectors 5.52 2.94 35.88 260 -99.05

Basic Materials 5.64 3.22 55.9 409.8 -90

Consumer Goods 0.15 0 29.28 143.75 -92.13

Consumer Services 3.39 -0.53 46.53 366.67 -94.82

Financials 3.52 2.12 26.34 159.85 -96.8

Health Care 13.49 12.27 43.11 221.68 -99.05

Industrials 3.67 2.5 28.57 160 -92

Oil & Gas 2.06 1.66 44.65 333.33 -97.96

Technology 11.84 7.1 34.8 248.39 -98.01

Telecommunications -1.86 4.39 63.2 409.09 -77.98

Utilities 4.45 3.53 14.55 90.14 -55.56

Total Return 1 Quarter Average Median Std Dev High Low

Health Care 8.43 6.63 11.26 33.81 -13.73

Pharmaceuticals &

Biotechnology 10.3 14.27 14.87 52.31 -5.1


Services 6.4 5.65 9.23 21.37 -13.73

Relative Valuation - Sector

Ticker Name P/B P/E

S5UTIL S&P 500 UTILITIES INDEX 1.614478424 16.64157999

S5TELS S&P 500 TELECOM SERV IDX 2.280880105 16.05865517

S5MATR S&P 500 MATERIALS INDEX 2.901400065 18.43976655

S5INFT S&P 500 INFO TECH INDEX 3.755710509 17.93875737

S5INDU S&P 500 INDUSTRIALS IDX 3.189900076 17.73945484

S5HLTH S&P 500 HEALTH CARE IDX 3.799800557 20.13685007

S5FINL S&P 500 FINANCIALS INDEX 1.303102887 13.19363525

S5ENRS S&P 500 ENERGY INDEX 1.966284176 14.60190889

S5CONS S&P 500 CONS STAPLES IDX 4.315422193 17.92531647

S5COND S&P 500 CONS DISCRET IDX 4.271540392 20.4955769

Relative Valuation - Industry P/B Average Median Std Dev High Low

Pharmaceuticals &

Biotechnology 5.87 5.11 5.17 17.78 2.46


Services 3.05 2.94 1.34 5.55 1.05

P/E Average Median Std Dev High Low

Pharmaceuticals &

Biotechnology 29.24 29.24 33.43 125.44 13.13


Services 19.15 19.72 5.84 33 9.7

Ticker Name P/B P/E Industry Sub-Industry

GILD Gilead 10.732 43.8361 Biotech & Pharma Biotech

TEVA Teva Pharamceuticals - 10.822Est Biotech & Pharma Generic Pharmaceuticals

ACT Actavis PLC 3.9859 50.3317 Biotech & Pharma Generic Pharmaceuticals

MYL Mylan Inc 6.1802 30.0365 Biotech & Pharma Generic Pharmaceuticals

AET Aetna 1.9006 12.0244 Health Care Facilities/Srvcs Managed Care

MCK McKesson Corp 5.053 24.9471 Health Care Facilities/Srvcs Health Care Facility Chain

COV Covidien PLC 3.3996 17.9897 Medical Equipment/Devices Medical Equipment

STJ St. Jude Medical Inc 3.5235 17.7983 Medical Equipment/Devices Cardiovascular Devices


Business Cycle


- Opportunities & Threats

Power of Suppliers

Power of Buyers

Threat of Substitutes

Industry Competition

Threat of entry


–Population Trend

After ACA Implementation

The 80/20 Rule of ACA.

What Does This Mean the

Health Care Sector?

More Individuals will be entering into the health care market

and access to health care products such as pharmaceuticals

will increase.

There will be a greater distribution of revenues and costs as

young adults sign up for health care.

Higher Premiums will be seen as health care companies pass

on incurred costs of ACA onto consumers.

Health Care companies are shifting fees and taxes by the

government back onto tax payers

SIM Portfolio Jan 2014 TEVA

GILD

Recommendation

healthcare -sector presentation - health care...healthcare -sector presentation 02/25/2014 ......

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