Tomorrow the Supreme Court of the United States is expected to rule on the constitutionality of the Affordable Care Act, the Obama Administration’s hallmark healthcare legislation.
Goldman Sachs Analyst Matthew Borsch expects “muted” reaction to pharmaceuticals, biotechnology firms, and device manufacturers.
“That said, we think pharma and medical device names could trade somewhat higher on a ruling to overturn the entire law, at least to reflect avoidance of the excise tax on these industries,” Borsch says. “However, the stakes under a ruling are highest for managed care and hospitals, which together represent 10% of our covered healthcare market cap.”
Below, expected stock returns under each possible outcome.
Photo: Goldman Sachs