Surprise: Reform hurts health care stocks
We're beginning to see the hits these companies are going to take, and it's brutal.
By Jim Cramer, TheStreet
You mean health care reform is bad for health care stocks? You mean that they get hurt by it? You mean people will sell them because of it?
That's what I am hearing all over the health care world this week. This is revelation time.
We got all comfortable thinking that there were nothing but winners in the health care world. Instead, we start hearing from everyone that numbers are too high because of the reforms. Abbott (ABT) said that Wednesday and we heard it definitively from Lilly (LLY) on Monday -- 35 cents worth of definitive -- and that's just plain nasty.
And if you blow the numbers away, like UnitedHealth (UNH) did yesterday, it just gets worse. Given the leeway the secretary of Health and Human Services has to lord over this group, it would have been a terrific time for UnitedHealth to blow the quarter. In the end, they made so much money they couldn't hide it. Post continues after video:
The group would have languished if only because of the rotation going on as people figure out that it is better to be levered to the hottest business cycles -- consider the Boeing (BA) and Boeing-related stocks (mentioned earlier as a buy when BA was lower). But number cuts? And number cuts that nobody apparently was factoring in?
Just plain dreadful.At the time of publication, Cramer had no positions in the stocks mentioned.
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The company is scrambling to protect its equities arm, which could face declining volume and revenue as competitors close the gap.
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