Investors hope first-quarter earnings spark publicly traded hospital stocks that have been in the doldrums since the start of the year.
The Modern Healthcare Hospital Stock Index ended Tuesday at 720.47, up 3.4% since Jan. 4.
But that doesn't begin to recapture the ground lost for the nine companies in the index since prices began to swoon last August.
Dallas-based Tenet Healthcare, whose stock closed at $29.24 on Tuesday and has been virtually flat in 2016, has suffered a 47% drop in stock price since it ended at $55 a share on Aug. 5.
Franklin, Tenn.-based Community Health Systems' Tuesday closing price of $17.37 is down 34% since Jan. 4 and down a whopping 69% since Aug. 5.
Nashville-based HCA Holdings is one of the few bright spots on the index this year. Its price closed at $77.16 on Tuesday, up 16% since Jan. 4. But it is still down 16% overall since reaching $92.26 on Aug. 5.
The stock prices of Tenet, Community Health Systems and other healthcare stocks are still nursing a hangover after missing earnings targets in the third quarter. That was fueled by slow Medicaid enrollments and a peak of new patients covered under the Affordable Care Act, said Brian Tanquilut, senior vice president of healthcare equity research at investment firm Jefferies & Co.
The whole healthcare sector has been in retreat since late summer. That's evidenced by a 14% drop since Aug. 5 in the NYSE Healthcare Index and a 12% drop in the S&P Healthcare Index during the same period.
But a better first-quarter earnings season that begins next month could change that trajectory, Tanquilut said.
Earnings across the sector stabilized in the fourth quarter, he said, giving rise to hopes that healthcare stocks could get some traction if first-quarter financials improve.
“We might see a little lift,” Tanquilut said.
During a February earnings call, Tenet CEO Trevor Fetter lauded the hospital chain's fourth-quarter and year-end financial results, saying they will improve as the company completes massive $840 million-plus hospital-building campaigns in each of the past three years.
In February, HCA issued bullish investor guidance for 2016. The nation's largest hospital company by revenue said revenue is expected to range from $41.5 billion to $42.5 billion and adjusted earnings per share on a diluted basis would range from $6 per share to $6.45.
That compares with 2015 adjusted earnings of $4.99 per diluted share.
Tanquilut cautioned, though, that the presidential election could influence healthcare stocks.
The presidential primaries are creating uncertainty about the federal direction of healthcare spending, Tanquilut said. Prospective Democrat nominee Hillary Clinton has often been anti-pharma on the road and pro-provider, while Republican frontrunner Donald Trump's healthcare platform is yet to be seen.
“We're seeing a little overhang from the election,” Tanquilut said.