The Health Care Select Sector SPDR® Fund ETF (NYSEARCA:XLV), which tracks the health care sector, and holds a weightage of 12.12% in the S&P 500 index, advanced 1.80% in Q3, falling short of the S&P 500’s 7.91% rise. Year-to-date, the performance gap is wider: the XLV has gained only 4.29%, trailing the S&P 500’s robust 14.10% increase.
As the Q3 earnings season begins, investors are scrutinizing the healthcare sector’s outlook. The XLV ETF fares well on several key metrics, earning an A+ score for dividends, expenses, and liquidity. However, the ETF’s current performance is undermined by poor market mechanics, reflected in its low ratings of D for risk/volatility and D+ for momentum.
The sector includes major corporations across pharmaceuticals, healthcare services, biotech, and medical equipment. Its largest constituents include Eli Lilly + Co (NYSE:LLY), UnitedHealth Group Inc (NYSE:UNH), and Johnson + Johnson (NYSE:JNJ).
IQVIA (NYSE:IQV) +16.81%
Bottom 5 S&P 500 healthcare performers in Q3:
Molina Healthcare (NYSE:MOH) -37.52%
Align Technology (NASDAQ:ALGN) -35.55%
Baxter (NYSE:BAX) -27.09%
DexCom (NASDAQ:DXCM) -19.83%
Elevance Health (NYSE:ELV) -18.35%
What Quantitative Measures Say
According to Seeking Alpha’s Quant Rating system, the healthcare sector has a score of 3.18 out of 5 with a Neutral rating. The system awards grades based on quantitative measures, like valuation, earnings growth, and recent stock performance. The highest possible score for any individual company is 5.
The index fares well on profitability metrics with a score of A, but it scores a D+ on growth and C+ on valuation and C in momentum.
McKesson (NYSE:MCK) has the highest score of 4.82 with a Strong Buy rating as the company achieved record Q2 earnings, with three segments delivering double-digit growth, reflecting strong momentum across the entire business and raised its fiscal 2026 outlook ahead of the consensus in conjunction with its 2025 Investor Day, followed by Boston Scientific Corporation (NYSE:BSX) rating of 4.68 and Incyte Corporation (NASDAQ:INCY) with a quant rating of 4.66.
The lowest quant-rated stocks coincide with the worst performers for the Q3— Bio-Techne (NASDAQ:TECH), Align Technology (NASDAQ:ALGN) has a Strong Sell rating with a score of 1.28, and 1.30, respectively, and the lowest factor grades given to growth.
Industries Q3 performance
The Health Care Equipment & Services sector rose 2.48% in Q3, while Pharmaceuticals, Biotechnology and Life Sciences rose 5.21% in Q3.
In healthcare this week
In light of Pfizer’s (NYSE:PFE) announcement on Tuesday that it will offer its drugs at reduced prices to American consumers, President Trump is backing off his threat to impose 100% tariffs on imported pharmaceuticals to give other drugmakers time to cut their own deals. As part of the agreement announced on Tuesday, Pfizer (NYSE:PFE) has agreed to provide four of its brand-name drugs at sharp discounts to cash-paying customers through a government-run website called TrumpRx and to Medicare. The company also plans a $70B U. S. investment in exchange for tariff relief.
Recently, Pfizer (PFE) has made a $4.9 billion deal to acquire Metsera, aiming to enter the obesity treatment market currently led by Eli Lilly and Novo Nordisk.
On Tuesday, Eli Lilly (NYSE:LLY) has also announced that it is in talks with the Trump administration to provide discounted drugs to consumers as part of the new TrumpRx direct-to-consumer website.
Related ETFs: Health Care Select Sector SPDR Fund (NYSEARCA:XLV), SPDR S&P Pharmaceuticals ETF (NYSEARCA:XPH), VanEck Pharmaceutical ETF (NASDAQ:PPH), iShares Nasdaq Biotechnology ETF (NASDAQ:IBB), iShares U.S. Pharmaceuticals ETF (NYSEARCA:IHE), and Invesco Nasdaq Biotechnology ETF (NASDAQ:IBBQ).
More on The Health Care Select Sector SPDR® Fund ETF
- XLV: Market Overreaction Could Drive Double Digit Shareholder Yield
- XLV Vs. IHE: Will Pharmaceuticals Outperform Healthcare?
- XLV: Life Expectancy, Patents, And A Positive Outlook Will Pave The Way
- Notable healthcare headlines for the week: Novo Nordisk and UnitedHealth in focus
- SA Asks: How will H-1B visa changes impact the healthcare sector?