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
P/E (Last Year GAAP Actual)
P/E (This Year's Estimate)
Enterprise Value
EPS (TTM)
EPS Growth (TTM vs. Prior TTM)
Revenue Growth (TTM vs. Prior TTM)
Return on Equity (TTM)
Return on Investment (TTM)
Total Debt/Equity (TTM)
Dividend Yield
$4.13T
31.92
29.46
$97.00B
$2.79
-48.13%
28.16%
16.63%
10.19%
56.57
2.42%
Sector
Health Care Industry
Health Care Sub-Industry
51%
Pharmaceuticals
Pharmaceuticals &
Biotechnology
72%
21%
Biotechnology
4%
Medical Supplies
Health Care
Equipment &
Services
Medical Equipment
12%
Health Care Providers
12%
28%
0%
20%
40%
60%
80%
0%
10%
20%
30%
40%
50%
60%
Weights
Weights in S&P 500
TELECOM SERV
2.23%
Weights in SIM
UTILITIES
3.03%
TELECOM SERV
1.20%
MATERIALS
3.52%
MATERIALS
3.05%
CONS DISCRET
12.32%
INFO TECH
18.93%
Cash
1.78%
Dividend
Receivables
0.06%
CONS DISCRET
13.24%
CONS STAPLES
9.46%
INFO TECH
20.30%
ENERGY
10.13%
CONS STAPLES
9.47%
ENERGY
8.91%
INDUSTRIALS
10.72%
INDUSTRIALS
8.69%
FINANCIALS
15.92%
HEALTH
CARE
13.75%
UTILITIES
3.43%
HEALTH
CARE
14.04%
FINANCIALS
15.83%
Key Players
#
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
Gilead Sciences Inc.
Amgen Inc.
Bristol-Myers Squibb Company
AbbVie Inc.
Biogen Idec Inc.
GILD US
AMGN US
BMY US
ABBV US
BIIB US
126.90B
93.13B
88.22B
81.44B
77.64B
9 UnitedHealth Group Incorporated
UNH US
72.76B
10 Celgene Corporation
CELG US
66.18B
4
5
6
7
8
Relation with S&P 500
Correlation=0.97
150.00%
130.00%
110.00%
90.00%
70.00%
50.00%
30.00%
10.00%
-10.00%
-30.00%
-50.00%
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
Regression
Residual
Total
1
1291
1292
Intercept
X Variable 1
Coefficients
-0.10723467
1.071486884
SS
MS
F
Significance F
121.7110218 121.7110218 20055.89172
0
7.834552127 0.006068592
129.5455739
Standard Error
t Stat
P-value
0.003893602 -27.5412542 9.8399E-132
0.007565992 141.6188255
0
Lower 95%
Upper 95% Lower 95.0% Upper 95.0%
-0.11487315 -0.09959619 -0.11487315 -0.09959619
1.056643897 1.086329872 1.056643897 1.086329872
Financial Analysis – ToRe1yr
Total Return 1 Year
All Sectors
Basic Materials
Consumer Goods
Consumer Services
Financials
Health Care
Industrials
Oil & Gas
Technology
Telecommunications
Utilities
Total Return 1 Year
Health Care
Pharmaceuticals &
Biotechnology
Health Care Equipment &
Services
Average
30.49
21.54
24.12
35.46
24.48
51.48
30.13
16.28
36.9
16.28
15.15
Average
Median
14.95
-0.59
13.58
21.28
13.28
18.17
18.36
5.31
19.72
18.55
12.79
Median
Std Dev
77.4
58.55
73.3
79.22
76.44
88.04
56.63
70.16
88.88
105.64
19.3
Std Dev
High
622.39
225
400
616.67
860
398.69
257.14
449.59
575
466.15
80.28
High
Low
-100
-99.87
-99.63
-100
-99.99
-100
-100
-98.13
-99.97
-99.61
-60.62
Low
39.88
30.83
31.68
116.34
-24.44
48.22
49.22
46.19
158.61
-11.34
30.4
25.31
23.63
74.13
-24.44
Financial Analysis – ToRe 3m
Total Return 1 Quarter
All Sectors
Basic Materials
Consumer Goods
Consumer Services
Financials
Health Care
Industrials
Oil & Gas
Technology
Telecommunications
Utilities
Total Return 1 Quarter
Health Care
Pharmaceuticals &
Biotechnology
Health Care Equipment &
Services
Average
5.52
5.64
0.15
3.39
3.52
13.49
3.67
2.06
11.84
-1.86
4.45
Average
Median
2.94
3.22
0
-0.53
2.12
12.27
2.5
1.66
7.1
4.39
3.53
Median
Std Dev
35.88
55.9
29.28
46.53
26.34
43.11
28.57
44.65
34.8
63.2
14.55
Std Dev
High
260
409.8
143.75
366.67
159.85
221.68
160
333.33
248.39
409.09
90.14
High
Low
-99.05
-90
-92.13
-94.82
-96.8
-99.05
-92
-97.96
-98.01
-77.98
-55.56
Low
8.43
6.63
11.26
33.81
-13.73
10.3
14.27
14.87
52.31
-5.1
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 &
5.87
5.11
5.17
17.78
Biotechnology
Health Care Equipment &
3.05
2.94
1.34
5.55
Services
P/E
Average Median
Std Dev High
Low
Pharmaceuticals &
29.24
29.24
33.43
125.44
Biotechnology
Health Care Equipment &
19.15
19.72
5.84
33
Services
Ticker
Name
GILD
Gilead
TEVA
Teva Pharamceuticals
ACT
P/B
P/E
Industry
2.46
1.05
13.13
9.7
Sub-Industry
10.732
43.8361 Biotech & Pharma
-
10.822Est Biotech & Pharma
Generic Pharmaceuticals
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
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
5.053
Biotech
24.9471 Health Care Facilities/Srvcs Health Care Facility Chain
Business Environment
Business Cycle
Business Environment
- Opportunities & Threats
Power of
Suppliers
Threat of
entry
Industry
Competition
Power of
Buyers
Threat of
Substitutes
Business Environment
–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
Q&A