Short-term price action won't change underlying bio-pharma sector's values

Healthcare was one sector that did not fully participate in the recent stockmarket rally and finished the first quarter as the worst performer in the S&P 500 index, writes Legg Mason's Evan Bauman.

Owning healthcare stocks continued to be a headwind as perceptions of pricing pressures and political uncertainties related to the US presidential election have kept valuations from recovering. Legacy drug treatments that have been acquired by companies and had their prices raised significantly have drawn the most scrutiny from politicians and regulators. There is a good opportunity to target innovative companies within the biopharmaceutical space targeting large unmet needs with novel platforms and products that should continue to maintain pricing power. Healthcare valuations are ...