The Trump administration’s sweeping tariffs have sent ripples through the healthcare sector in 2025.
Last week, the US government locked in pharmaceutical tariffs on the EU at 15%.
The new levies raise concerns over cost inflation and supply chain bottlenecks, making investors reassess the sector’s defence reputation amid rising geopolitical risks and inflationary headwinds.
“XLV” or the Health Care Select Sector SPDR Fund that tracks the performance of the healthcare sector at large is currently down some 8.0% versus its year-to-date high in the first week of March.
Still, Mizuho’s senior analyst Jared Holz remains convinced the healthcare stocks remain strongly positioned to weather the tariff-related challenges.
What to expect from healthcare stocks amid tariff tantrum?
Pharma tariffs on the EU are significant for healthcare investors, given “a lot of drugs are manufactured there,” Holz agreed in a recent interview with CNBC.
The analyst maintained, however, that healthcare stocks can navigate these new taxes, especially since they’ve been locked at 15% only versus as much as 250% indicated previously.
According to Mizuho, the contrarian appeal of beaten-down valuations could help healthcare stocks do better in the second half of 2025.
The sector can weather the policy moves also because “you are not going to stop needing insulin or hip replacement because of tariffs,” Holz argued in an interview earlier this year.
All in all, the fundamentals of the healthcare industry, he’s convinced, remain intact with the large-cap US-based firms with diversified operations, particularly better positioned to absorb the shocks.
Where Holz sees opportunity within healthcare stocks
According to Jarez Holz, investors should pick healthcare names “that are solving real problems,” like chronic disease management in the back half of this year.
He’s also constructive on healthcare names leveraging artificial intelligence (AI) and remote care tools to expand margins and reach.
Within pharmaceutical stocks, one name that especially pops out to him is Eli Lilly & Co. (NYSE: LLY) which is currently down well over 20% versus its year-to-date high in early March.
I’m fairly sure its oral obesity drug will be better than how analysts have perceived it. If we see tech and other high-flying industry verticals dip a little, that’s where you want to be buying.
Should you invest in Eli Lilly stock today?
Eli Lilly shares have been hit hard in recent weeks after the pharma giant reported underwhelming trial data for its obesity pill.
Still, several experts assert that it remains a viable rival to Novo Nordisk’s anti-obesity drug.
That’s why the consensus rating on Eli Lilly stock remains at “overweight” with the mean target of about $912, indicating potential upside of well over 25% from current levels.
Plus, a 0.84% dividend yield makes LLY shares all the more attractive to own for the long term.
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