SPDR S&P Health Care Equipment (ARCA: XHE)

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In seeking to track the performance of the S&P Health Care Equipment Select Industry Index (the index), the fund employs a sampling strategy. It generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index. The index represents the health care equipment segment of the S&P Total Market Index (S&P TMI).

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Analyst upgrades Haemonetics to Buy, believes company can reach high-20% operating margin goal by FY26 through product mix analysis. Price target set at $112.

Haemonetics&#39; Strategic Moves Poised To Boost Margins And Earnings, Says Analyst

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It&#39;s a good time to look at how the major U.S. stock industry ETFs performed this month, as April comes to an end. In April, we saw the broader U.S.

Here Are The Best-Performing Industry ETFs And Major Stock Contributors In April

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A Scintillating Health Care ETF

Needham &amp; Co. analyst Mike Matson upgraded Haemonetics Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HAE#NYSE">HAE</a>) from Hold to <a target="_blank" href="https://www.benzinga.com/quote/hae/analyst-ratings" rel="noreferrer noopener">Buy with a price target of $112.</a>
The analyst says that Haemonetics has reaffirmed its &#8220;high-20%&#8221; FY26 operating margin goal. To reach this, the company must improve by approximately 600 basis points from its FY24 margin of 21.1%, writes the analyst.
While the analyst earlier doubted the company&#8217;s ability to reach this target, the product mix analysis has <a target="_blank" href="https://www.benzinga.com/calendars/guidance" rel="noreferrer noopener">bolstered their confidence.</a>
The analyst has identified two key factors influencing the company&#8217;s gross margin, which includes the reduction in lower-margin Plasma sales to CSL and the expansion of higher-margin Interventional Technologies sales.
These factors alone could improve gross margins by about 400 basis points by FY26. Combined with 200 basis points of operating leverage, HAE should meet its 27%+ operating margin target by then, says the analyst.
Also, Matson says that the CSL headwind is manageable and already incorporated into consensus estimates.
The analyst anticipates multiple expansions as Haemonetics&#8217;s quarterly results demonstrate progress toward achieving its FY26 target.
Matson estimates EPS of $4.60 for FY25 and $5.53 for FY26.
Investors can gain exposure to the stock via Neuberger Berman ETF Trust Neuberger Berman Small-Mid Cap ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NBSM#NYSE">NBSM</a>) and SPDR S&amp;P Health Care Equipment (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XHE#NYSE">XHE</a>).
Price Action: HAE shares are up 4.55% at $87.21 at the last check Wednesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Shutterstock

Haemonetics' Strategic Moves Poised To Boost Margins And Earnings, Says Analyst

One of the best-performing corners of the health care sector this year is the medical device and equipment space, and total returns confirm the sentiment.
The two exchange traded funds&nbsp;dedicated to medical device and equipment manufacturers are up by an average of about 24 percent year-to-date, quadruple the roughly 6-percent gain in&nbsp;the broad Health Care Select Sector SPDR (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xlv#NYSE">XLV</a>), the largest health care ETF by assets.
<h3>What Happened</h3>
The SPDR S&amp;P Health Care Equipment ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xhe#NYSE">XHE</a>) is not the biggest of the medical device and equipment ETFs, but it is the top performer this year, up 27.4 percent. If XHE, an equal-weight fund, is able to maintain its advantage over its cap-weighted rival through the end of 2018, that would mark&nbsp;the third time in the past four years it has outperformed its cap-weighted counterpart.
XHE is&nbsp;on a three-year winning streak against diversified health care ETFs like XLV. XHE is benchmarked to the Health Care Equipment Select Industry Index, which is a collection of health care equipment and supplies makers.
<h3>Why It&#39;s Important</h3>
As has been widely documented, small-cap stocks and funds are surging this year, due in part to smaller companies being more dependent on the domestic economy for revenue. That trait has helped small-caps weather tariff and trade war-related storms this year. Drilling down on the success of broad small-cap funds this year indicates health care is an important driver of 2018 small-cap upside.
&ldquo;Within the small-cap space, we found the health care equipment industry presented an attractive growth opportunity,&rdquo; State Street said&nbsp;<a href="https://global.spdrs.com/blog/post/2018/July/software-and-healthcare-equipment-2-sectors-to-consider-in-q3.html">in a recent note</a>. &ldquo;Since the first quarter of 2017, health care equipment has followed a growth trajectory, posting its fourth consecutive double-digit earnings growth in the first quarter of this year.&rdquo;
With a weighted average market value of $14.37 billion for its holdings, XHE is, by definition, not a small-cap ETF. The figure is still well below the $122.78-billion weighted average market cap on XLV&#39;s components.
<h3>What&#39;s Next</h3>
Neither politics nor election results are the lone determinant of XHE&#39;s performance. After all, the fund did deliver some impressive annual performances during the previous administration, but XHE has derived some benefit from the White House&#39;s present occupant.&nbsp;
&ldquo;Following the passage of the 21st Century Cures Act, the FDA sped up its Premarket Approval process in 2017, approving the second-highest number of innovative medical devices since 2005, providing strong product pipeline support for the industry growth,&rdquo; said SSgA. &ldquo;Also, the suspension of a 2.3-percent&nbsp;medical device tax for&nbsp;another two years relieved investor concerns&nbsp;about the industry growth.&rdquo;
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/18/07/12054887/bringing-some-glamour-to-infrastructure-etfs">Spicing Up The Infrastructure Trade</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/18/07/12054889/the-new-naacp-fund-shows-esg-etfs-are-evolving">A New Spin on ESG ETFs</a>

Where To Be With Health Care ETFs

The healthcare sector is the second-best performer in the S&amp;P 500 this year behind technology. Traditional, diversified healthcare exchange traded funds are delivering for investors. Just look at the Health Care Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlv#NYSE">XLV</a>).
The largest healthcare ETF is up 18.7 percent year-to-date. However, tactical investors have been reward even more with more focused healthcare ETFs. A prime example of that theme is the SPDR S&amp;P Health Care Equipment ETF (NYSE: <a class="ticker" href="/stock/xhe#NYSE">XHE</a>), which hit an all-time high Tuesday and is up nearly 28 percent this year.
Strength from medical device and equipment makers is not a new theme. That sub-industry was the best-performing corner of the healthcare sector last year when the broader healthcare space notched its first annual negative performance since 2008.
<h3>
	Details On XHE</h3>
XHE, which turns seven years old in January, tracks the S&amp;P Health Care Equipment Select Industry Index. That benchmark &ldquo;provides the potential for unconcentrated industry exposure across large, mid and small cap stocks,&rdquo; <a href="https://us.spdrs.com/en/etf/spdr-sp-health-care-equipment-etf-XHE">according to State Street</a>.
Home to 68 stocks, XHE focuses on two industry groups: Healthcare equipment manufacturers and healthcare suppliers with the former representing nearly three-quarters of the ETF&#39;s weight.
&ldquo;Among the device types, cardiovascular medical devices are the dominating segment in terms of revenue due to its rising incorporation in the cardiac surgeries which is rising worldwide,&rdquo; according to the <a href="https://www.researchandmarkets.com/research/t335qb/global" target="_blank">&quot;Global Reprocessed Medical Devices Market Size, Market Share, Application Analysis, Regional Outlook, Growth Trends, Key Players, Competitive Strategies and Forecasts, 2017 - 2025&quot;</a> report. &ldquo;Devices such as cardiac positioning and stabilization devices, electrophysiology catheters and blood pressure cuffs are the widely used reprocessed medical devices.&rdquo;
<h3>
	Waiting On Tax Help</h3>
In the U.S. alone, the medical device industry is a $140 billion industry. A potential catalyst looms with Republicans&#39; efforts to permanently repeal a burdensome tax aimed at the industry that was part of the Affordable Care Act. That tax was suspended late in the Obama Administration, but industry leaders are pushing the Trump Administration to repeal it outright.
XHE is not a large ETF as it has just over $155 million in assets under management, but on a percentage basis, the ETF is growing rapidly as about a third of its assets have flowed in just this year.
Related Links:
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/10/10129018/a-growth-etf-for-october">A Growth ETF For October</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/10/10128986/this-tech-etf-soars-with-no-u-s-stocks">A Soaring Tech ETF</a>

Politics

This Healthcare ETF Continues Beating Higher

As has been widely documented, the healthcare sector, the S&amp;P 500&#39;s third-largest sector weight, is struggling this year. The Health Care SPDR (ETF) (NYSE: <a class="ticker" href="/stock/xlv#NYSE">XLV</a>), the largest healthcare exchange-traded fund by assets, is down nearly 4 percent this year and is in position to notch its first annual decline since 2008.
There have been pockets of strength with the healthcare sector, notably from healthcare equipment and medical device manufacturers. Just look at the SPDR Series Trust (NYSE: <a class="ticker" href="/stock/xhe#NYSE">XHE</a>). XHE is up nearly 12 percent year-to-date, making it this year&#39;s best-performing non-leveraged healthcare ETF.
<h3>XHE Vs. IHI</h3>
XHE holds 71 stocks with a weighted average market value of $10.6 billion, putting the ETF squarely in mid-cap territory. That makes XHE significantly different than its chief competitor, the iShares Dow Jones US Medical Dev.(ETF) (NYSE: <a class="ticker" href="/stock/ihi#NYSE">IHI</a>), which holds 52 stocks. IHI is a cap-weighted fund, while XHE uses an equal-weight methodology.
Not surprisingly, that leads to diverging returns, as XHE is outpacing IHI by more than 200 basis points this year. Over the past three years, XHE has trailed IHI while being slightly more volatile. About 74.5 percent of XHE&#39;s holdings are considered healthcare equipment makers while the remainder of the ETF&#39;s lineup is classified as <a href="https://us.spdrs.com/en/product/fund.seam?ticker=XHE"> makers of healthcare supplies</a>.
<h3>Politics And Healthcare</h3>
As has been duly noted throughout the course of this presidential election, rhetoric from both parties concerning high pharmaceuticals prices has been a drag on the healthcare sector and for biotechnology stocks in particular.
Unfortunately, healthcare leaders have recently retreated. For example, medical device makers have been the strongest part of the healthcare sector this year, but have recently tumbled. XLV allocates over <a href="https://www.spdrs.com/">23 percent of its weight</a> to healthcare equipment makers and life sciences tools manufacturers.
Politics are also at play for ETFs such as XHE and IHI, but in a more positive way.
&ldquo;&ldquo;When the Affordable Care Act (ACA), also known as Obamacare, was passed in 2010, the legislation include a tax on medical device companies, including those found in IHI. It is widely expected that the Trump Administration will work to repeal that tax and do swiftly,&rdquo; according to <a href="http://investorplace.com/2016/12/healthcare-etfs-bounce-back-ihi-cncr-pth/2/#.WFnj233573B">InvestorPlace</a>.

Markets

iShares Dow Jones US Medical Devices Index Fund

Meet This Year's Best Healthcare ETF

It is a big "if" regardless of sector or asset class, the "if" being possible help from Capitol Hill, but it is possible that a group of U.S. senators could boost the fortunes of medical device stocks and the ETFs that track those equities.

As has been <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/11/3075943/medical-device-etfs-flash-bearish-technicals-fundamentals-pos">previously noted, medical device ETFs</a>, such as the iShares Dow Jones U.S. Medical Devices Index Fund (NYSE: <a class="ticker" href="/stock/ihi#NYSE">IHI</a>) and the Health Care Equipment ETF (NYSE: <a class="ticker" href="/stock/xhe#NYSE">XHE</a>), could be vulnerable to selling pressure in 2013.

That downside would not be the result of the fiscal cliff. Rather, IHI, XHE and their components are vulnerable due to what is a nasty aspect of the Affordable Care Act, or Obamacare. Within Obamacare there is a punitive tax on medical device makers.

A study by the non-partisan Battelle Technology Partnership Practice highlights the notion this is not any old tax. It is one that is expected to cost tens of thousands of jobs and <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/03/2449787/overturn-obamacare-these-etfs-could-benefit-ibb-ihi-ihf">billions of dollars of lost U.S. GDP</a>.

As was the case with the broader market, IHI and XHE stumbled the days immediately following President Obama's reelection. And has been the case with broader market, the two ETFs have rallied in recent weeks. In fact, in the past month, IHI is up 4.4 percent and XHE is higher by 3.8 percent. Arguably, those gains merely give eager shorts a higher price from which to punish these ETFs come the first trading day of 2013 when the tax on medical device makers goes into effect.

That is unless a group of 17 Democratic senators have their way and get the medical device tax repealed. As the <a href="http://www.washingtonpost.com/blogs/right-turn/wp/2012/12/12/medical-device-tax-hypocrites/">Washington Post notes</a>, this situation could have been avoided because the members of this group of 17 that were in office when Obamacare was voted on voted in favor of the legislation, which included the medical device manufacturer tax.

As the senators <a href="http://online.wsj.com/public/resources/documents/MedDeviceLetter12102012.pdf">point out in a letter</a> to Senate Majority Leader Harry Reid (D-NV), the medical technology industry directly employs 400,000 people in the U.S. and it is one of the few U.S. industries that enjoys a net trade surplus. Smart investors (and constituents) will no doubt ask why the senators that signed this letter, 15 of which were in office when Obamacare was passed, voted for the bill. Those same investors and constituents may also be wondering why these policymakers have suddenly changed their respective tunes.

One need only examine the rosters of IHI, XHE and the home states of the senator's that signed the letter to Reid. For the purposes of this exercise, IHI will be the ETF of choice because it has almost $282 million in assets under management compared to XHE's modest total of $20.17 million.

IHI's five largest holdings are Medtronic (NYSE: <a class="ticker" href="/stock/mdt#NYSE">MDT</a>), Covidien (NYSE: <a class="ticker" href="/stock/cov#NYSE">COV</a>), Thermo Fisher Scientific (NYSE: <a class="ticker" href="/stock/tmo#NYSE">TMO</a>), Intuitive Surgical (NASDAQ: <a class="ticker" href="/stock/isrg#NASDAQ">ISRG</a>) and Stryker (NYSE: <a class="ticker" href="/stock/syk#NYSE">SYK</a>).

Excluding Covidien for a moment because it is based in Ireland, it is worth noting Medtronic is based in Minnesota, Thermo Fisher is based in Massachusetts, Intuitive Surgical is headquartered in California and Stryker makes its home in Michigan.

Covidien currently has <a href="http://careers.covidien.com/locations.aspx">job openings in a number of states</a>, including Indiana, Michigan, Minnesota, Nebraska, New Hampshire and New York. 

Not surprisingly, the roster of senators to sign the letter to Reid includes both a sitting senator and a senator-elect from Massachusetts, a senator-elect from Indiana, both Minnesota senators, both New York senators, and one each from Michigan, Nebraska and New Hampshire. 

IHI's other top-10 holdings are Indiana-based Zimmer Holdings (NYSE: <a class="ticker" href="/stock/zmh#NYSE">ZMH</a>), Minnesota-based St. Jude Medical (NYSE: <a class="ticker" href="/stock/stj#NYSE">STJ</a>), California's Varian Medical (NYSE: <a class="ticker" href="/stock/var#NYSE">VAR</a>) and Boston Scientific (NYSE: <a class="ticker" href="/stock/bsx#NYSE">BSX</a>) and Waters (NYSE: <a class="ticker" href="/stock/wat#NYSE">WAT</a>), both of which call Massachusetts home. 

Said differently, of the senator's representing states IHI's top-10 holdings are either based or do significant business in, Barbara Boxer and Dianne Feinstein, two California Democrats, stand out for not having signed the letter to Reid. 

With less than three weeks before the end of the year and politicians from both parties immersed in fiscal cliff-solving activities, it appears unlikely the medical device tax will be repealed before January 1, 2013. That could mean a tough start to the new year for IHI and XHE. Still, investors should keep an eye on these ETFs throughout 2013 and be flexible enough to consider long positions as well. After all, five of the senators that signed the Reid letter are up for reelection in 2014. 

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

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Pre-Market Outlook

Intraday Update

ISRG

Surprisingly, Politicians Could Boost Medical Device ETFs

Three days removed from the latest U.S. elections and it is fair to say the market did not like the result. It is also fair (and accurate) to say U.S. equities have performed well since President Obama took office in 2009. 

Some market historians would be inclined to argue that price action in stocks is not a direct result of whomever resides in the White House. That may be true. Maybe it is not, but there is no getting around the fact that some sectors can be positively and negatively affected by electoral politics. There is also no denying that stocks and ETFs have a tendency to overreact following elections.

However, that does not change the fact that nearly 500 ETFs and ETNs, or more than a third of third of the entire U.S.-listed exchange products universe, entered Friday below the critical 200-day moving average. Fund managers and technicians often view securities that reside below the 200-day line as far removed from a bull market and vulnerable to further declines. 

Two of those ETFs are the iShares Dow Jones US Medical Devices Index Fund (NYSE: <a class="ticker" href="/stock/ihi#NYSE">IHI</a>) and its more equal-weight rival, the SPDR S&amp;P Health Care Equipment ETF (NYSE: <a class="ticker" href="/stock/xhe#NYSE">XHE</a>). The funds are rallying today as the broader market aims to cut some of its Wednesday/Thursday losses.

Well, sort of rallying. IHI, which has $274.3 million in assets under management, is up 0.9 percent. Sounds good until one discovers that with less than fours to go in the session, IHI's volume is barely over 1,800 shares. The ETF's average daily volume for the past three months is over 40,000. XHE is up by roughly the same amount of volume of just 350 shares. That ETF's average turnover for the past 90 days is 1,950 shares.

The reason why investors should not be lured in by Friday's bounce in IHI and XHE is simple: The underlying holdings of these could be in for some tough times now that President Obama has been re-elected. As Benzinga reported <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/03/2449787/overturn-obamacare-these-etfs-could-benefit-ibb-ihi-ihf">in March</a> one of the dirty secrets of Obamacare is a tax on medical device makers. 

A study by the non-partisan Battelle Technology Partnership Practice highlights the notion this is not any old tax. It is one that is expected to cost tens of thousands of jobs and billions of dollars in lost U.S. GDP growth at a time when the U.S. economy can afford neither. 

And as Benzinga <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/11/3066684/more-pain-awaits-medical-device-etfs">reported earlier this week</a>, the road investors face with ETFs such as IHI and XHE is made even more difficult for a couple of reasons. For starters, most investors surmised that health care stocks would benefit from an Obama re-election. That might ultimately be the case for ETFs such as the Health Care Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlv#NYSE">XLV</a>) and the iShares Dow Jones U.S. Healthcare Providers Index Fund (NYSE: <a class="ticker" href="/stock/ihf#NYSE">IHF</a>). That will not be the case for IHI and XHE.

Second, and perhaps by virtue of assumption that an Obama win was supposed to be good for the health care sector at large, mainstream coverage of the medical device tax and the problems it can create for investors has been scant at best. 

That is odd when considering the average market cap of the stocks in the Dow Jones U.S. Medical Devices Index, the index tracked by IHI, was almost $14.5 billion at the end of September, <a href="http://us.ishares.com/content/stream.jsp?url=/content/en_us/repository/resource/fact_sheet/ihi.pdf&amp;mimeType=application/pdf">according to iShares data</a>.

Medtronic (NYSE: <a class="ticker" href="/stock/mdt#NYSE">MDT</a>), IHI's top holding with a weight of almost 11 percent, has a market value north of $42 billion. Intuitive Surgical (NASDAQ: <a class="ticker" href="/stock/isrg#NASDAQ">ISRG</a>), one of the great growth stocks of the past decade, has a market cap of just over $21 billion. In other words, IHI and XHE are not home to small, unknown companies.

Medtronic has said the tax <a href="http://www.nationalreview.com/corner/332758/obamas-medical-device-tax-already-killing-jobs-and-cures-deroy-murdock">could hurt its future investments</a>. Stryker (NYSE: <a class="ticker" href="/stock/syk#NYSE">SYK</a>) and Zimmer Holdings (NYSE: <a class="ticker" href="/stock/zmh#NYSE">ZMH</a>) have already announced layoffs related to the tax. The two are IHI's fifth- and sixth-largest holdings, combing for 11 percent of the ETF's weight.

In September 2011, Advanced Medical Technology Association forecast the loss of 43,000 jobs related to the Obamacare tax <a href="http://www.mpo-mag.com/news/2011/09/07/advamed_study_details_potential_effects_of_device_tax">on medical device makers</a>. Even if the number works out to just half that, 21,500 lost jobs is 21,500 too many.

It is unlikely IHI and XHE's constituents will benefit because analysts will realize any increase in profitability, saying that scenario even arrives, will have come by way of cost cuts, not top-line growth. In other words, Friday's bullishness in these two ETFs is a sucker's rally.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Technicals

iShares Dow Jones US Health Care Provides Index Fund

Medical Device ETFs Flash Bearish Technicals, Fundamentals Post-Obama Win

Select health care ETFs are outperforming the broader market today, though that is not saying much given that the S&amp;P 500 is down almost 1.9 percent as of this writing. Two examples of the sector's post-Election Day outperformance include the Health Care Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlv#NYSE">XLV</a>) and the Market Vectors Pharmaceuticals ETF (NYSE: <a class="ticker" href="/stock/pph#NYSE">PPH</a>), which are off 1.6 percent and one percent, respectively.

The relative sturdiness of PPH, XLV and rival ETFs is no surprise following President Obama's easy reelection victory Tuesday night. Leading up to the election, it was widely expected <a href="http://www.benzinga.com/markets/bonds/12/11/3062454/for-a-post-election-risk-on-rally-buy-these-etfs">health care ETFs would be beneficiaries of a second Obama term</a> as traders speculated Republican rival Mitt Romney might try to undo Obamacare if elected. 

XLV, which is heavy on blue-chip pharmaceuticals names such as Johnson &amp; Johnson (NYSE: <a class="ticker" href="/stock/jnj#NYSE">JNJ</a>), Pfizer (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>) and Merck (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>), <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/09/2939541/s-p-highlights-election-etfs">was highlighted by analysts as one ETF investors</a> should embrace should Obama win. 

However, while XLV, PPH and comparable might eventually keep their bull runs going in the wake of Obama's easy Tuesday night victory, one sub-sector of the health care space looks vulnerable. That being medical device manufacturers.

In March, Benzinga reported that medical device makers and the corresponding ETFs could be traders' cross-hairs if Obamacare was implemented to its fullest extent. As a study by the <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/03/2449787/overturn-obamacare-these-etfs-could-benefit-ibb-ihi-ihf">Battelle Technology Partnership Practice</a> highlighted, Obamacare contains a job-killing, GDP-sapping tax on medical device makers. 

Battelle, <a href="http://advamed.org/NR/rdonlyres/6C514FB6-8497-475C-84DC-7872A9DDBADC/0/BattelleFinalAdvaMedEconomicImpactReportMarch2012.pdf">which appears to be non-partisan</a>, said the medical device featured in Obamacare could lead to the loss of tens of thousands of jobs and billions of dollars of lost GDP for the U.S.

On a related note, it appears at least some traders realize medical device names need to be avoided, at least in the near-term. The iShares Dow Jones U.S. Medical Devices Index Fund (NYSE: <a class="ticker" href="/stock/ihi#NYSE">IHI</a>) is off almost 2.1 percent today. The rival SPDR Health Care Equipment ETF (NYSE: <a class="ticker" href="/stock/xhe#NYSE">XHE</a>), which is more of an equal product, is lower by the same amount.

To be sure, these are not the most popular ETFs on the market. IHI and XHE combine for less than $294 million in assets under management. The former's average daily volume is less than 41,000 shares per day. XHE's average daily turnover is barely above 3,300 shares.

Still, these ETFs are home to some of the most familiar names in the medical device sub-sector. For example, Medtronic (NYSE: <a class="ticker" href="/stock/mdt#NYSE">MDT</a>), Intuitive Surgical (NASDAQ: <a class="ticker" href="/stock/isrg#NASDAQ">ISRG</a>) and St. Jude Medical (NYSE: <a class="ticker" href="/stock/stj#NYSE">STJ</a>) combine for over 23 percent of IHI's weight. Medtronic is down almost three percent today while St. Jude is approaching a four percent loss.

Practically speaking, dangers loom for IHI and XHE. Arguably, many investors are not aware of the "stealth" medical device in Obamacare. President Obama would not have been wise to run around touting the tax and he did not. Investors might also be apt to be an ETF such as IHI as a success under the first Obama term. After all, in three-year period ending on Election Day, the ETF had surged almost 41 percent, including paid dividends.

It is that performance that might explain why the medical device tax got so little mainstream media coverage in the days leading up to the election. The Wall Street Journal and USA Today did prominently mention the issue, but it was not exactly on display in other major mainstream media outlets. 

Fortunately for investors, the IHI and XHE gave some clues that departure time was drawing near. In the month leading up to Election Day, XHE plunged 6.3 percent, more than double IHI's loss. The ETF's are giving more clues today. If IHI drops another one percent, it will dip below its 200-day moving average and that is a bearish sign.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Merrill Lynch Pharmaceutical HOLDRs Trust

More Pain Awaits Medical Device ETFs

As investors have become more acquainted with exchange-traded products, some have wondered why so many broader market and sector funds are dominated by the largest companies. As Apple (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>) has shown investors, an ETF's excessive allocation to just one or two stocks is fine on the way, but <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/04/2499691/apples-slide-exposes-flaws-in-some-etfs-aapl-qqq-iyw">rather dangerous on the way down</a>.

The reason why the companies with largest market values loom large in so many ETFs is simple: Many ETFs use a cap-weighted methodology to assign weights to the components. For example, a cap-weighted ETF focused on U.S.-based energy producers would, more than likely, have Exxon Mobil (NYSE: <a class="ticker" href="/stock/xom#NYSE">XOM</a>) as its largest component, Chevron (NYSE: <a class="ticker" href="/stock/cvx#NYSE">CVX</a>) as its second-largest and so on.

There are alternatives to cap-weighting, namely in the form of equal-weight ETFs. The concept behind equal-weight equity-based ETFs is a compelling one. After all, one of the allures of ETFs is gaining exposure to multiple stocks through one fund and no one likes the nasty surprise of finding out their ETF is excessively weighted to just one or two stocks.

Some equal-weight ETFs have risen to acclaim over the years for outperforming their cap-weighted counterparts over long time horizons. Some toil in anonymity. Here is a look at a few of the more anonymous equal-weight ETFs that have the potential to deliver solid returns.

First Trust NASDAQ-100 Equal Weighted Index Fund (NASDAQ: <a class="ticker" href="/stock/qqew#NASDAQ">QQEW</a>)
Depending on one's view of Apple, QQEW is either an afterthought or the perfect tech ETF for the times. Apple, the world's largest company by market value, accounts for a scant 0.91 percent of QQEW. That means the iPad maker is 35 basis points "less important" to this ETF than Netflix (NASDAQ: <a class="ticker" href="/stock/nflx#NASDAQ">NFLX</a>), the fund's largest holding.

These days, that is not a bad thing. As Apple has tumbled, <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/10/3027207/can-apple-amazon-earnings-save-these-etfs">QQEW has shown its mettle</a>. In the past month, shares of Apple have plunged 9.5 percent, dragging the PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>) to a loss of 4.7 percent in the process. Over the same period, QQQEW is off just 3.1 percent. 

Given Apple's large weight in QQQ, currently 18.9 percent, the premise here is simple. QQEW offers protection from downside in that stock while keeping investors exposed to the tech sector. Also consider the Direxion NASDAQ 100 Equal Weighted Shares (NYSE: <a class="ticker" href="/stock/qqqe#NYSE">QQQE</a>).

SPDR S&amp;P Health Care Equipment ETF (NYSE: <a class="ticker" href="/stock/xhe#NYSE">XHE</a>)
Some folks may not realize that the SPDR sector funds, not the select sector SPDRs such as the Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>), are actually equal-weight products. They are not perfect in terms of equal weights, meaning XHE does not have 100 components each accounting for one percent.

Rather, XHE has 58 holdings and the largest receives a weight of 2.89 percent. XHE's approach is working. Year-to-date, the ETF has outperformed its primary rival, the iShares Dow Jones U.S. Medical Devices Index Fund (NYSE: <a class="ticker" href="/stock/ihi#NYSE">IHI</a>), by 150 basis points.

Guggenheim S&amp;P 500 Equal Weight Health Care ETF (NYSE: <a class="ticker" href="/stock/ryh#NYSE">RYH</a>)
RYH will celebrate its sixth birthday on Thursday, but the fund has just $53.9 million in assets under management, indicating that investors have not yet taken note of the utility of this ETF. Where RYH stands out is at the sub-sector level where it spreads about 78 percent of its weight between health care services providers, equipment makers and traditional pharmaceuticals names.

While RYH does not track the same index as XLV, the two are bound to draw comparisons to each other. XLV, the largest health care ETF with $5.4 billion in assets, is up 16.2 percent this year. That is only marginally better than RYH and RYH could easily be viewed as the more attractive option because of its equal status.

Figure it this way. If Johnson &amp; Johnson (NYSE: <a class="ticker" href="/stock/jnj#NYSE">JNJ</a>), Pfizer (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>) and Merck (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>) combined for 34 percent of XLV's weight. Those stocks are intimately correlated to each other, implying investors do not have to worry about single-stock risk with XLV. They have to be concerned with potential three-stock (maybe more) risk with this ETF.

Considering that pharmaceuticals stocks are performing well this year, it would be reasonable to expect RYH would be lagging an ETF like XLV by a wider margin. That has not been the case and that makes RYH all the more attractive.

For more on equal-weight ETFs, click <a href="http://www.benzinga.com/trading-ideas/long-ideas/11/08/1830998/five-equal-weight-etfs-your-broker-forgot-to-mention">here</a>.

Tech

AAPL

NFLX

First Trust NASDAQ-100 Equal Weighted Index Fund

QQEW

QQQE

Rydex ETF Trust Rydex S&P Equal Weight Health ETF

More Equal-Weight ETFs Your Broker Forgot to Mention 

<div class="entry-content">

		Sometimes when I analyze a stock, I am reminded of the marvels that investment bankers can do for their valuations, especially if the company is a good client. With its recent $3.7 billion acquisition of Gen-Probe, I would bet that Hologic (NASADQ: HOLX) made its investment bankers quite happy.

		Investors, on the contrary, should sell the stock and not be happy with that deal.

		As usual, Hologic management lauds the acquisition because of (1) its positive earnings accretion and (2) synergies, which are never quantified or specified.

		Sounds great, right? The problem is much of what management says is misleading. Per the well-documented <a href="http://blog.newconstructs.com/2012/08/31/the-high-low-fallacy-dont-believe-the-merger-hype/">high-low fallacy</a>, one of the biggest misconceptions in the investing world is that the merit of an acquisition should be judged by whether or not it is &ldquo;earnings accretive&rdquo;. The impact of an acquisition on a company&rsquo;s accounting earnings is not indicative of its value to shareholders.

		From HOLX&rsquo;s <a href="http://investors.hologic.com/2012-08-01-Hologic-Completes-Acquisition-Of-Gen-Probe">8/1/2012 press release</a> announcing the close of the Gen-Probe deal: &ldquo;the transaction delivers a strong growth profile with attractive economics and is expected to be $0.20 accretive to Hologic&rsquo;s non-GAAP adjusted earnings per share in fiscal 2013 and significantly more accretive on a non-GAAP basis thereafter.&rdquo;

		Now for the economics of the deal. HOLX paid $3.7 billion for roughly $90 million in annual after-tax cash flow (based on Gen-Probe management&rsquo;s guidance for 2012 earnings). That equals a return on investment of about 2.4%. In other words, HOLX just allocated capital that, without synergy, earns somewhere between a 10yr and 30yr treasury bond, which is far below the company&rsquo;s weighted-average cost of capital of about 7.2%. Not so good for investors. And it is a sign that more write-downs are in the company&rsquo;s future.
<div>

			Figure 1: Write-Downs Are Already Huge for HOLX &nbsp;
</div>
<div>

			<a href="http://blog.newconstructs.com/wp-content/uploads/2012/09/Sell_HOLX_Fig1.jpg"><img alt="" class="aligncenter size-full wp-image-4510" height="217" src="http://blog.newconstructs.com/wp-content/uploads/2012/09/Sell_HOLX_Fig1.jpg" title="Sell_HOLX_Fig1" width="363" /></a>

			Sources: New Constructs, LLC and company filings
</div>

		The synergies required to make the Gen-Probe deal truly accretive to shareholders equal around $400 million in annual cost savings or incremental profits. I could not find any specific comments on cost savings or incremental revenues in management&rsquo;s discussion of the &ldquo;attractive economics&rdquo; of the deal. Maybe that&rsquo;s because the economics are not attractive.

		Making bad investments is not new to management of HOLX. Figure 1 (above) compares Hologic&rsquo;s reported net assets to the accumulated write-downs (after-tax) that the company has made since 2004. As of FYE 2011, accumulated write-downs equals over 60% of the reported net assets. That means HOLX&rsquo;s management has written down over 60 cents for every dollar of stakeholder investment in the company.

		Write-downs represent the <a href="http://blog.newconstructs.com/2011/01/20/red-flag-report-hidden-management-failures-asset-write-downs/">failure of management</a> to allocate capital successfully. In my opinion, management&rsquo;s most important responsibility is to be good stewards of investors&rsquo; capital. Nearly $3 billion in write-offs over the last several years does not inspire me to trust this management team with any of my capital.

		Even if we do not add back the write-downs, the return on invested capital (ROIC) of this business is on the decline. See Figure 2. Removing the $3 billion in write-downs from invested capital raises the ROIC from 2.4% in 2011 to 4.5%, still well below the firm&rsquo;s WACC of 7.2%.
<div>

			Figure 2: Profitability Is On the Decline&nbsp;
</div>
<div>

			<a href="http://blog.newconstructs.com/wp-content/uploads/2012/09/Sell_HOLX_Fig2.jpg"><img alt="" class="aligncenter size-full wp-image-4509" height="212" src="http://blog.newconstructs.com/wp-content/uploads/2012/09/Sell_HOLX_Fig2.jpg" title="Sell_HOLX_Fig2" width="396" /></a>

			Sources: New Constructs, LLC and company filings
</div>

		Despite the poor track record of this management team, the valuation of the stock is very expensive. That is why I am marveling at, what I speculate to be, HOLX&rsquo;s investment bankers&rsquo; influence on the stock&rsquo;s price.

		To be sure, the valuations premium will not last. But for now, it is impressive. How impressive? To justify the current price of the stock (~$20/share), the company has to grow profits (<a href="http://www.newconstructs.com/nc/help/glossary.htm#nopat">NOPAT</a>) at 20% compounded annually for 10 years. That is a high hurdle especially when compared to the last three years when NOPAT growth averaged -10%.

		HOLX&rsquo;s poor profits and high valuation earn it my <a href="http://blog.newconstructs.com/2011/11/22/stock-rating-system-new-constructs-methodology-for-rating-equities/">Very Dangerous rating</a>. HOLX was also added to my <a href="http://www.newconstructs.com/nc/research/report/most-dangerous-reports.htm">Most Dangerous Stocks</a> list in August.

		As Figure 3 shows, the recent rise in HOLX makes the stock about as expensive as it was during the last stock market bubble. The current <a href="http://blog.newconstructs.com/2012/06/18/price-to-economic-book-value-or-price-to-ebv/">economic book value</a> of the stock is under $4/share. That is the no-growth value of the stock so it is probably not the stock&rsquo;s fair value. The point is that $16 of the $20 value of the stock is justified only by future profit growth, and a lot of it.

		I respect the company&rsquo;s product line and think they serve an important role in the health care of women. There is an important difference, however, between a good company and a good stock. Hologic may be a good company, but it&rsquo;s stock is not good.

		When this stock&rsquo;s valuation reconciles with its true profits, it could drop a long ways&hellip;bad risk/reward.
<div>

			Figure 3: Valuation Is High and Getting Higher 

			<a href="http://blog.newconstructs.com/wp-content/uploads/2012/09/Sell_HOLX_Fig3.jpg"><img alt="" class="aligncenter size-full wp-image-4508" height="215" src="http://blog.newconstructs.com/wp-content/uploads/2012/09/Sell_HOLX_Fig3.jpg" title="Sell_HOLX_Fig3" width="368" /></a>

			Sources: New Constructs, LLC and company filings
</div>

		As my regular readers know, I also cover 7400+ ETFs and mutual funds. My <a href="http://blog.newconstructs.com/2011/11/23/predictive-fund-rating-methodology/">predictive fund ratings</a> leverage the deep research I do on all of the 3000+ stocks covered by my firm, New Constructs.

		The ETFs and funds that allocate 2% or more to HOLX and get a Dangerous or worse rating are:
<ol>
<li>
			Forum Funds: Fountainhead Special Value Fund (NYSE: KINGX)</li>
<li>
			Advisors&rsquo; Inner Circle Fund: Rice Hall James Mid Cap Portfolio (NYSE: RHJVX)</li>
<li>
			Allianz Funds: RCM Wellness Fund (NYSE: RAG),(NYSE: RBGHX), (NYSE: <a class="ticker" href="/stock/rcg#NYSE">RCG</a>)</li>
<li>
			BlackRock Funds: BlackRock Small Cap Growth Equity Portfolio (NYSE: <a class="ticker" href="/stock/csgex#NYSE">CSGEX</a>), (NYSE: PCGEX), (NYSE: PSGIX), (NYSE: CSGBX), (NYSE: CGICX)</li>
<li>
			SPDR S&amp;P Health Care Equipment ETF (NYSE: <a class="ticker" href="/stock/xhe#NYSE">XHE</a>)</li>
</ol>

		New Constructs&rsquo; <a href="http://www.newconstructs.com/nc/fundscreener/fund-screener.htm">free fund screener</a> provides free reports on 7400+ mutual funds and ETFs, including all of the funds mentioned in this article.

		Disclosure: I receive no compensation to write about any specific stock, sector or theme.
</div>

BlackRock Funds Small Cap Growth Equity Portfolio Investor A Class

CSGEX

"Earnings Accretion" Is a Mirage: Sell Hologic (HOLX)

Many exchange-traded products that are afflicted with low assets under management (AUM) totals and paltry average daily volume do have at least one thing going for them: Performance. The small, obscure funds clearly do not appeal to investors when it comes to the superficial statistics, but these ETFs <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/07/2740931/etf-liquidity-thinly-traded-etfs-are-not-so-bad">pack a punch where it counts</a>, often outperforming larger rivals.

That might be one reason the ETF liquidity argument is <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/08/2848986/do-these-etfs-really-have-liquidity-problems">starting to be framed in a different light</a>. After all, AUM and ADV do not tell an investor whether an ETF is going to deliver superior alpha.

Actually, tying an ETF's performance to its AUM is one of the biggest fallacies in the financial markets today. Assuming an ETF is "illiquid" because it sports a small ADV number is not far behind. 

"[Volume] is the one that really gets my attention; mainly because ETF ADV is not a true measure of the liquidity of the underlying assets and by default, the actual ETF," wrote Chris Hempstead director of ETF execution services at WallachBeth Capital, in a recent research note. "In its most basic form, <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/08/2849585/debunking-some-common-etf-myths#ixzz24FemI1rJ">simply looking at ADV and dismissing a fund based solely on that metric</a> might steer you away from funds that are quoted in block size at the minimal increment [one penny]."

The unfortunate reality is many advisors and money managers are still focused on superficial metrics such as AUM and ADV. Another reality is that is quite easy to locate small, lightly traded ETFs that are have delivered double-digit returns on a year-to-date basis. 

The ETFs featured here had to meet three criteria: Year-to-date returns of at least 10 percent, average daily volume of less than 100,000 shares and less than $50 million in assets under management. 

Here is a sampling of what that screen turned up:

Market Vectors Retail ETF (NYSE: <a class="ticker" href="/stock/rth#NYSE">RTH</a>)
Home to stocks such as Wal-Mart (NYSE: <a class="ticker" href="/stock/wmt#NYSE">WMT</a>), Amazon (NASDAQ: <a class="ticker" href="/stock/amzn#NASDAQ">AMZN</a>), Home Depot (NYSE: <a class="ticker" href="/stock/hd#NYSE">HD</a>) and Target (NYSE: <a class="ticker" href="/stock/tgt#NYSE">TGT</a>), the Market Vectors Retail ETF is not likely to suffer from liquidity issues. To be fair, ADV of about 75,000 shares is decent, but this ETF is surprisingly small regarding AUM. RTH has just $16.3 million in AUM, <a href="http://etfdb.com/screener/">according to ETFdb data</a>.

Despite its diminutive stature, RTH has jumped 16.2 percent year-to-date, outperforming the far larger SPDR S&amp;P Retail ETF (NYSE: <a class="ticker" href="/stock/xrt#NYSE">XRT</a>) in the process.

PowerShares Dynamic Financial Sector Portfolio (NYSE: <a class="ticker" href="/stock/pfi#NYSE">PFI</a>)
Perhaps there are just too many ETFs tracking financial services firms on the market today. That might help explain why the PowerShares Dynamic Financial Sector Portfolio is almost six-years-old, but has AUM of just $16.2 million and ADV below 2,800 shares. 

As is the case with RTH, PFI's lineup indicates there is little chance this ETF will suffer from liquidity problems. There is a robust market for stocks such as American International Group (NYSE: <a class="ticker" href="/stock/aig#NYSE">AIG</a>), US Bancorp (NYSE: <a class="ticker" href="/stock/usb#NYSE">USB</a>) and BB&amp;T (NYSE: <a class="ticker" href="/stock/bbt#NYSE">BBT</a>). PFI is up about 11 percent this year.

SPDR S&amp;P Health Care Equipment ETF (NYSE: <a class="ticker" href="/stock/xhe#NYSE">XHE</a>)
Chances are when a client asks his or her financial advisor about ETFs offering exposure to health care equipment stocks, the advisor recommends the iShares Dow Jones U.S. Medical Devices Index Fund (NYSE: <a class="ticker" href="/stock/ihi#NYSE">IHI</a>).

Bad call. Year-to-date, over the past year and since the SPDR S&amp;P Health Care Equipment ETF debuted in early 2011, the fund has outperformed IHI. Adding insult to injury is the fact that XHE has the lower expense ratio. Those superlatives are attached to an ETF with less than $17 million in AUM and ADV of less than 22,000 shares. In 2012, XHE has outpaced IHI by 300 basis points.

Vanguard Russell 2000 Growth ETF (NASDAQ: VTWG)
The Vanguard Russell 2000 Growth ETF is further proof that even some of the kings of the ETF business sponsor a few funds that struggle to attract large AUM totals. VTWG is also light in the volume category with ADV of just over 5,900 shares. 

With <a href="http://etfdb.com/etf/VTWG/">$20.2 million in AUM</a>, VTWG is one example of a Vanguard ETF that has not been able to outdo a comparable iShares product. Despite, being five basis cheaper than the iShares Russell 2000 Growth Index Fund (NYSE: <a class="ticker" href="/stock/iwo#NYSE">IWO</a>), VTWG is nowhere near the size of its iShares rival. IWO has over $3.8 billion in AUM, indicating its 10-year head start on VTWG has proven significant. Both funds are up a bit more than 10 percent year-to-date.

For more on ETF myths, click <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/08/2849585/debunking-some-common-etf-myths">here</a>.

AMZN

PowerShares Dynamic Financial Sector Portfolio

Merrill Lynch Retail HOLDRS Trust due 12/31/41

Low Assets, Low Volume No Problem for These ETFs

Here's a quick look at some of the top performing health care stocks, year to date. These stocks all have a market cap of more than $1 billion and all pay a dividend.

Baxter International (NYSE: <a class="ticker" href="/stock/bax#NYSE">BAX</a>) is more than 11% higher than a month ago, and more than 17% higher than a year ago. The company just reported better-than-expected Q4 results and announced FDA approval of its fibrin sealant. This diversified health care company has a market cap of $31.3 billion and a dividend yield of 2.4%. The P/E ratio is less than the industry average. Over the past six months, the stock has outperformed Becton, Dickinson (NYSE: <a class="ticker" href="/stock/bdx#NYSE">BDX</a>) and Thermo Fisher (NYSE: <a class="ticker" href="/stock/tmo#NYSE">TMO</a>).

Covidien (NYSE: <a class="ticker" href="/stock/cov#NYSE">COV</a>) is almost 15% higher than a month ago and less than 10% below the 52-week high. The medical technology company just posted EPS that were better than expected, but also lowered its sales forecast for the fiscal year. This $24.9 billion market cap company has a dividend yield of 1.8%. Its P/E ratio is less than the industry average. The stock has outperformed competitors Becton, Dickinson and CR Bard (NYSE: <a class="ticker" href="/stock/bcr#NYSE">BCR</a>) over the past six months.

See also: <a href="http://www.benzinga.com/news/12/01/2286033/clinical-data-for-durability-ii-study-presented-at-iset-2012-met-predetermined-vp">Clinical Data for DURABILITY II Study Presented at ISET 2012</a>.

Dr. Reddy's Laboratories (NYSE: <a class="ticker" href="/stock/rdy#NYSE">RDY</a>) is up more than 16% from a month ago, but still down almost 4% from a year ago. This India-based pharmaceutical company has a dividend yield of 0.8% and a market cap of $5.8 billion. The long-range EPS growth forecast is 22.9% and the return on equity is 25.3%. The P/E ratio is less than the industry average but so is the operating margin. Over the past six months, the stock has outperformed competitor Teva Pharmaceuticals (NASDAQ: <a class="ticker" href="/stock/teva#NASDAQ">TEVA</a>).

Mindray Medical International (NYSE: <a class="ticker" href="/stock/mr#NYSE">MR</a>) shares are trading about 16% higher year to date and less than 5% below the 52-week high. The Chinese medical device maker recently said it plans to launch 7 to 10 new products for 2012. It has a dividend yield of 1.0%, the long-term EPS growth forecast is 15.9% and the operating margin is better than the industry average. Over the past six months, the stock has outperformed competitors Baxter and Covidien.

PerkinElmer (NYSE: <a class="ticker" href="/stock/pki#NYSE">PKI</a>) is up more than 20% since the beginning of the year, but still about 5% lower than a year ago. The company is expected to post double-digit EPS and revenue growth when it reports quarterly results on February 2. Based in Waltham, Mass., the company has a market cap of $2.7 billion, a dividend yield of 1.2% and a long-term EPS growth forecast of 14.3%. The stock has outperformed competitors such as Thermo Fisher over the past six months.

St. Jude Medical (NYSE: <a class="ticker" href="/stock/stj#NYSE">STJ</a>) is more than 21% higher year to date, up more than 8% just in the past week. The medical device maker recently posted better-than-expected quarterly results, prompting at least one analyst upgrade. St. Jude has a market cap of $13.3 billion and its dividend yield is 2.0%. The return on equity is 19.5% and the long-term EPS growth forecast is 12.4%. The stock has outperformed competitor Boston Scientific (NYSE: <a class="ticker" href="/stock/bsx#NYSE">BSX</a>) over the past six months.

See also: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/01/2291541/update-goldman-sachs-raises-target-to-40-on-st-jude-medi">Goldman Sachs Raises Target to $40 on St. Jude Medical</a>.

Zimmer Holdings (NYSE: <a class="ticker" href="/stock/zmh#NYSE">ZMH</a>) shares are trading almost 14% higher year to date, after an more than 7% bump in the past week when it beat earnings estimates and offered a better-than-expected profit forecast. The Indiana-based medical device maker has a market cap of $10.9 billion, a long-term EPS growth forecast of 9.6% and a dividend yield of 1.2%. Over the past six months, the stock's performance has been in line with fellow medical device maker Stryker (NYSE: <a class="ticker" href="/stock/syk#NYSE">SYK</a>).

See also: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/01/2298727/update-piper-jaffray-upgrades-zimmer-holdings-from-neutr">Piper Jaffray Upgrades Zimmer Holdings from Neutral to Overweight</a>.

<div id="action-items">ACTION ITEMS:

Bullish: Investors interested in exchange traded funds focused on health care might want to consider the following trades:

<ul><li>iShares Dow Jones US Medical Devices (NYSE: <a class="ticker" href="/stock/ihi#NYSE">IHI</a>) is more than 8% higher year to date.</li>
<li>ProShares Ultra Health Care (NYSE: <a class="ticker" href="/stock/rxl#NYSE">RXL</a>) is more than 7% higher year to date.</li>
<li>SPDR S&amp;P Health Care Equipment (NYSE: <a class="ticker" href="/stock/xhe#NYSE">XHE</a>) is about 7% higher year to date.</li>
<li>Rydex S&amp;P Equal Weight Health Care (NYSE: <a class="ticker" href="/stock/ryh#NYSE">RYH</a>) is more than 6% higher year to date.</li>
</ul>Bearish: Traders may prefer to consider these alternative positions:

<ul><li>ProShares UltraShort Health Care (NYSE: <a class="ticker" href="/stock/rxd#NYSE">RXD</a>) is trading near the 52-week low.</li>
<li>Direxion Daily Healthcare Bear 3X Shares (NYSE: <a class="ticker" href="/stock/sick#NYSE">SICK</a>) is trading near the 52-week low.</li>
</ul>Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.</div>

SICK

TEVA

Top Performing Health Care Stocks in January

Cooper Companies (NYSE: <a class="ticker" href="/stock/coo#NYSE">COO</a>) is scheduled to report fiscal fourth-quarter 2011 results tomorrow afternoon, December 8. Its profit fell in the third quarter, breaking a streak of three consecutive quarters of year-over-year profit increases. Investors will be looking for Cooper to return to earnings growth, as well as to continue its double-digit year-over-year percentage revenue growth over the past four quarters. But results could be affected by recent recalls of contact lenses.

The analysts' forecast calls for Cooper to report that its per-share earnings increased 9.9% from the same quarter of last year to $1.21. That estimate is down a penny from 60 days ago. The consensus full-year estimate is $4.23 per share, an increase of 26.7%. Note that analysts have underestimated Cooper's earnings results in the past five quarters.

Analysts also expect the company to report that revenues for the quarter rose 13.9% from a year ago to $356.9 million. Full-year revenues are expected to come to $1.3 billion, which would be a 14.7% increase. Looking ahead to the current quarter, revenues are so far expected to rise 8.4%, with EPS up 11.4% year over year. 

The Company

Cooper Companies manufactures and markets health care products serving the vision care and women's health care markets worldwide. It operates through two business units: CooperVision is headquartered in Pleasanton, Calif., and CooperSurgical is headquartered in Trumbull, Conn. Cooper Companies was founded in 1980 and now has a market cap of $2.9 billion.

During the three months that ended in October, the company voluntarily recalled of some Avaira Toric contact lenses, and later expanded the recall. This has more recently prompted the filing of class-action lawsuits.

Performance

The company has a long-term earnings per share growth forecast of 13.7% and its dividend yield is 0.1% The forward earnings multiple is less than the industry average P/E ratio, and the PEG ratio is less than the industry average as well. The operating margin is better than the industry average. The consensus recommendation of analysts who follow the stock is to buy it, and they have a mean price target on shares that is more than 17% higher than the current share price.

The share price is about 21% lower than three months ago but still almost 12% higher than a year ago. It is far below the 50-day and 200-day moving averages. Over the past six months, the stock has underperformed Intuitive Surgical (NASDAQ: <a class="ticker" href="/stock/isrg#NASDAQ">ISRG</a>) and the broader markets, but its performance has been largely in line with that of Boston Scientific (NYSE: <a class="ticker" href="/stock/bsx#NYSE">BSX</a>).

Action Items:

Bullish: Investors interested in exchange traded funds with a stake in Cooper Companies might want to consider the following trades:

<ul><li>PowerShares Dynamic Healthcare (NYSE: <a class="ticker" href="/stock/pth#NYSE">PTH</a>) is about 17% higher than a recent 52-week low.</li>
<li>First Trust Health Care AlphaDEX (NYSE: <a class="ticker" href="/stock/fxh#NYSE">FXH</a>) is more than 12% higher than a recent 52-week low.</li>
<li>SPDR S&amp;P Health Care Equipment (NYSE: <a class="ticker" href="/stock/xhe#NYSE">XHE</a>) is more than 8% higher than a recent 52-week low.</li>
</ul>

Bearish: Traders may want to consider these alternative positions in the same sector:

<ul><li>Thoratec (NASDAQ: <a class="ticker" href="/stock/thor#NASDAQ">THOR</a>) is more than 21% higher than a year ago.</li>
<li>Teleflex (NYSE: <a class="ticker" href="/stock/tfx#NYSE">TFX</a>) is more than 21% higher than a year ago.</li>
<li>Luminex (NASDAQ: <a class="ticker" href="/stock/lmnx#NASDAQ">LMNX</a>) is about 17% higher than a year ago.</li>
</ul>

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Earnings

Previews

LMNX

PowerShares Dynamic Healthcare Sector Portfolio

THOR

Cooper Companies Earnings Preview: Double-Digit Revenue Growth Expected

Analogic (NASDAQ: <a class="ticker" href="/stock/alog#NASDAQ">ALOG</a>) is scheduled to report fiscal first-quarter 2012 results tomorrow, December 8, after the closing bell. The Massachusetts-based tech company is in transition, having last week announced the most comprehensive transformation of its corporate brand in its more than 40 year history. “Analogic has an incredibly bright and promising future,” Jim Green, president and CEO, promised in the announcement.

The consensus forecast of analysts calls for Analogic to report quarterly earnings of $0.43 per share, more than double from the same period of last year. And looking ahead to the current quarter, analysts so far anticipate sequential and year-over-year EPS growth. But note that Analogic's EPS fell short of consensus estimates in three of the past five quarters.

Analogic's revenue has now risen for three straight quarters. Analysts expect the company to report that revenues for the three months that ended in October increased 9.2% from a year ago to $113.4 million. And sequential and year-over-year growth in sales is predicted for the current quarter as well.

The Company

Headquartered in the Boston area, Analogic designs, manufactures, and sells systems and equipment for end users primarily in the health care and airport security markets worldwide. Its Medical Technology business consists of two segments, Medical Imaging and Ultrasound. Its Security Technology business includes checked bag and checkpoint products. The company was founded in 1967 and its market cap is now $688.1 million.

During the three months that ended in October, the company announced that it joined the newly formed Security Manufacturers Coalition. Analogic also settled an intellectual property dispute with Neurologica Corp. More recently, it announced the global branding initiative mentioned above.

Performance

Per-share earnings are expected to grow 15.0% over the next five years and the dividend yield is 0.7%. But the P/E and PEG ratios are higher than the industry average, and short interest in 5.7% of the float. Three out of six analysts recommend buying the stock; none consider it a sell. They have a mean price target of $59.25 per share, which is about 5% higher than the current share price.

The share price has jumped almost 7% in the past week and is once again nearing the 52-week high. And the 200-day and 50-day moving averages are approaching a golden cross. Over the past six months, the stock has outperformed competitors Analog Devices (NYSE: <a class="ticker" href="/stock/adi#NYSE">ADI</a>) and Linear Technology (NASDAQ: <a class="ticker" href="/stock/lltc#NASDAQ">LLTC</a>), as well as the broader markets.

Action Items:

Bullish: Investors interested in exchange traded funds wiith a stake in Analogic might want to consider the following trades:

<ul><li>PowerShares Dynamic Healthcare (NYSE: <a class="ticker" href="/stock/pth#NYSE">PTH</a>) is about 17% higher than a recent 52-week low.</li>
<li>iShares Dow Jones US Medical Devices (NYSE: <a class="ticker" href="/stock/ihi#NYSE">IHI</a>) is more than 9% higher than a recent 52-week low.</li>
<li>SPDR S&amp;P Health Care Equipment (NYSE: <a class="ticker" href="/stock/xhe#NYSE">XHE</a>) is more than 8% higher than a recent 52-week low.</li>
</ul>

Bearish: Traders may want to consider these alternative positions in the same sector:

<ul><li>FEI Co. (NASDAQ: <a class="ticker" href="/stock/feic#NASDAQ">FEIC</a>) is about 69% higher than a year ago.</li>
<li>Cepheid (NASDAQ: <a class="ticker" href="/stock/cphd#NASDAQ">CPHD</a>) is more than 52% higher than a year ago.</li>
<li>Cognex (NASDAQ: <a class="ticker" href="/stock/cgnx#NASDAQ">CGNX</a>) is more than 25% higher than a year ago.</li>
</ul>

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

ALOG

CGNX

CPHD

FEIC

LLTC

Analogic Earnings Preview: EPS Expected to Double

iShares Dow Jones US Healthcare Provider (NYSE: <a class="ticker" href="/stock/ihf#NYSE">IHF</a>) is up more than 19% year to date. The fund invests at least 90% of its assets in securities of the underlying index, which measures the performance of the health care providers sector of the U.S. equity market. Top holdings include UnitedHealth Group (NYSE: <a class="ticker" href="/stock/unh#NYSE">UNH</a>), WellPoint (NYSE: <a class="ticker" href="/stock/wlp#NYSE">WLP</a>) and Express Scripts (NASDAQ: <a class="ticker" href="/stock/esrx#NASDAQ">ESRX</a>).

First Trust Health Care AlphaDEX (NYSE: <a class="ticker" href="/stock/fxh#NYSE">FXH</a>) is up more than 16% year to date. The investment seeks results that correspond generally to the price and yield of the StrataQuant Health Care Index. Top holdings include Regeneron Pharmaceuticals (NASDAQ: <a class="ticker" href="/stock/regn#NASDAQ">REGN</a>), Endo Pharmaceuticals (NASDAQ: <a class="ticker" href="/stock/endp#NASDAQ">ENDP</a>) and UnitedHealth Group (NYSE: <a class="ticker" href="/stock/unh#NYSE">UNH</a>). 

Biotech HOLDRs (NYSE: <a class="ticker" href="/stock/bbh#NYSE">BBH</a>) is up about 16% year to date. The trust holds shares of common stock issued by specified companies that, when initially selected, were involved in the biotechnology industry. Except in special circumstances, the group of companies does not change. Top holdings include Amgen (NASDAQ: <a class="ticker" href="/stock/amgn#NASDAQ">AMGN</a>), Gilead Sciences (NASDAQ: <a class="ticker" href="/stock/gild#NASDAQ">GILD</a>) and Biogen Idec (NASDAQ: <a class="ticker" href="/stock/biib#NASDAQ">BIIB</a>). 

iShares Dow Jones US Pharmaceuticals (NYSE: <a class="ticker" href="/stock/ihe#NYSE">IHE</a>) is up more than 15% year to date. The fund invests at least 90% of its assets in securities of the underlying index, which measures the performance of the pharmaceuticals sector of the U.S. equity market. Top holdings include Johnson &amp; Johnson (NYSE: <a class="ticker" href="/stock/jnj#NYSE">JNJ</a>), Pfizer (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>) and Merck (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>).

iShares MSCI ACWI ex US Health Care Index (NYSE: AXHE) is up nearly 15% year to date. The fund generally invests at least 80% of its assets in securities of the MSCI All Country World ex USA Health Care index, which measures the performance of the health care sector of developed and emerging markets countries, excluding the United States.

PowerShares Dynamic Pharmaceuticals (NYSE: <a class="ticker" href="/stock/pjp#NYSE">PJP</a>) is up nearly 15% year to date. The investment seeks to replicate the Dynamic Pharmaceuticals Intellidex index, which includes companies engaged in the research, development, manufacture, sale or distribution of pharmaceuticals and drugs of all types. Top holdings include Eli Lilly (NYSE: <a class="ticker" href="/stock/lly#NYSE">LLY</a>), Merck (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>) and Amgen (NASDAQ: <a class="ticker" href="/stock/amgn#NASDAQ">AMGN</a>). 

iShares Dow Jones US Medical Devices (NYSE: <a class="ticker" href="/stock/ihi#NYSE">IHI</a>) is up nearly 15% year to date. The fund invests at least 90% of its assets in securities of the underlying index, which measures the performance of the medical equipment sector of the U.S. equity market. Top holdings include Medtronic (NYSE: <a class="ticker" href="/stock/mdt#NYSE">MDT</a>), Covidien (NYSE: <a class="ticker" href="/stock/cov#NYSE">COV</a>) and Thermo Fisher Scientific (NYSE: <a class="ticker" href="/stock/tmo#NYSE">TMO</a>).

iShares Nasdaq Biotechnology (NASDAQ: <a class="ticker" href="/stock/ibb#NASDAQ">IBB</a>) is up more than 14% year to date. The fund normally invests at least 90% of its assets in securities of Nasdaq-listed companies that are classified as either biotechnology or pharmaceuticals. Top holdings include Amgen (NASDAQ: <a class="ticker" href="/stock/amgn#NASDAQ">AMGN</a>), Teva Pharmaceutical (NASDAQ: <a class="ticker" href="/stock/teva#NASDAQ">TEVA</a>) and Celgene (NASDAQ: <a class="ticker" href="/stock/celg#NASDAQ">GELG</a>).

iShares S&amp;P Global Healthcare Sector Index Fund (NYSE: <a class="ticker" href="/stock/ixj#NYSE">IXJ</a>) is up nearly 14% year to date. The fund generally invests at least 90% of its assets in securities of health care providers, biotechnology companies and manufacturers of medical supplies, advanced medical devices and pharmaceuticals. Top holdings include Johnson &amp; Johnson (NYSE: <a class="ticker" href="/stock/jnj#NYSE">JNJ</a>), Pfizer (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>) and Merck (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>).

Vanguard Health Care ETF (NYSE: <a class="ticker" href="/stock/vht#NYSE">VHT</a>) is up more than 13% since the beginning of the year. The fund invests substantially all of its assets in the stocks that make up the MSCI U.S. Investable Market Health Care 25/50 Index. Top holdings include Johnson &amp; Johnson (NYSE: <a class="ticker" href="/stock/jnj#NYSE">JNJ</a>), Pfizer (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>) and Merck (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>).

iShares Dow Jones U.S. Healthcare (NYSE: <a class="ticker" href="/stock/iyh#NYSE">IYH</a>) is nearly 13% higher than at the beginning of year. The fund invests at least 90% of its assets in securities of health care equipment and services, pharmaceutical and biotechnology companies. Top holdings include Johnson &amp; Johnson (NYSE: <a class="ticker" href="/stock/jnj#NYSE">JNJ</a>), Pfizer (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>) and Merck (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>).

Health Care Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlv#NYSE">XLV</a>) is up more than 12% year to date. The underlying index includes companies from the pharmaceuticals, health care equipment and supplies, health care providers and services, biotechnology, life sciences tools and services, and health care technology industries. Top holdings include Johnson &amp; Johnson (NYSE: <a class="ticker" href="/stock/jnj#NYSE">JNJ</a>) and Pfizer (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>).

SPDR S&amp;P Health Care Equipment (NYSE: <a class="ticker" href="/stock/xhe#NYSE">XHE</a>) is up about 12% since the beginning of the year. The investment seeks to replicate the performance of an index derived from the health care equipment and supplies segment of a U.S. total market composite index. Top holdings include Mako Surgical (NASDAQ: <a class="ticker" href="/stock/mako#NASDAQ">MAKO</a>) and NuVasive (NASDAQ: <a class="ticker" href="/stock/nuva#NASDAQ">NUVA</a>).

Pharmaceutical HOLDRs (NYSE: <a class="ticker" href="/stock/pph#NYSE">PPH</a>) is up nearly 12% year to date. The trust holds shares of common stock issued by specified companies that, when initially selected, were involved in the pharmaceutical industry. Except in special circumstances, the group of companies does not change. Top holdings include Johnson &amp; Johnson (NYSE: <a class="ticker" href="/stock/jnj#NYSE">JNJ</a>), Pfizer (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>) and Merck (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>). 

SPDR S&amp;P Pharmaceuticals (NYSE: <a class="ticker" href="/stock/xph#NYSE">XPH</a>) is up nearly 12% since the beginning of the year. The underlying index represents the pharmaceuticals subindustry portion of the S&amp;P Total Market index. Top holdings include Questcor Pharmaceuticals (NASDAQ: <a class="ticker" href="/stock/qcor#NASDAQ">QCOR</a>), VIVUS (NASDSAQ: <a class="ticker" href="/stock/vvus#NASDAQ">VVUS</a>) and Valeant Pharmaceutical (NYSE: <a class="ticker" href="/stock/vrx#NYSE">VRX</a>).

AMGN

BIIB

CELG

ENDP

ESRX

GILD

iShares Dow Jones US Pharmaceuticals Index Fund

iShares Trust S&P Global Healthcare Sector Index Fund

iShares Trust Dow Jones US Healthcare Sector Index Fund

MAKO

NUVA

QCOR

REGN

VVUS

Fifteen Health Care ETFs Trading Near 52-Week Highs

PowerShares S&amp;P SmallCap Health Care (NYSE: <a class="ticker" href="/stock/psch#NYSE">PSCH</a>) is up nearly 22% year to date. The investment seeks to replicate the S&amp;P SmallCap 600 Capped Health Care index, which is comprised of common stocks of U.S. health care companies. Top holdings include Regeneron Pharmaceuticals (NASDAQ: <a class="ticker" href="/stock/regn#NASDAQ">REGN</a>), Amerigroup (NYSE: <a class="ticker" href="/stock/agp#NYSE">AGP</a>) and Cooper Companies (NYSE: <a class="ticker" href="/stock/coo#NYSE">COO</a>).

SPDR S&amp;P Biotech (NYSE: <a class="ticker" href="/stock/xbi#NYSE">XBI</a>) is up more than 19% since the beginning of the year. The underlying index represents the biotechnology subindustry portion of the S&amp;P Total Market index. Top holdings include Theravance (NASDAQ: <a class="ticker" href="/stock/thrx#NASDAQ">THRX</a>) and Savient Pharmaceuticals (NASDAQ: <a class="ticker" href="/stock/svnt#NASDAQ">SVNT</a>).

PowerShares Dynamic Healthcare (NYSE: <a class="ticker" href="/stock/pth#NYSE">PTH</a>) is up nearly 19% year to date. The underlying index consists of U.S. companies engaged in providing health care-related products and services, including biotechnology, pharmaceuticals, medical technology, supplies and facilities. Top holdings include Biogen Idec (NASDAQ: <a class="ticker" href="/stock/biib#NASDAQ">BIIB</a>), Humana (NYSE: <a class="ticker" href="/stock/hum#NYSE">HUM</a>) and St. Jude Medical (NYSE: <a class="ticker" href="/stock/stj#NYSE">STJ</a>). 

First Trust Health Care AlphaDEX (NYSE: <a class="ticker" href="/stock/fxh#NYSE">FXH</a>) is up more than 18% year to date. The investment seeks results that correspond generally to the price and yield of the StrataQuant Health Care Index. Top holdings include Regeneron Pharmaceuticals (NASDAQ: <a class="ticker" href="/stock/regn#NASDAQ">REGN</a>), Endo Pharmaceuticals (NASDAQ: <a class="ticker" href="/stock/endp#NASDAQ">ENDP</a>) and UnitedHealth Group (NYSE: <a class="ticker" href="/stock/unh#NYSE">UNH</a>). 

SPDR S&amp;P Health Care Equipment (NYSE: <a class="ticker" href="/stock/xhe#NYSE">XHE</a>) is about 17% higher since the beginning of the year. The fund tracks the total return performance of the S&amp;P Health Care Equipment Select Industry Index. Top holdings include Mako Surgical (NASDAQ: <a class="ticker" href="/stock/mako#NASDAQ">MAKO</a>) and NuVasive (NASDAQ: <a class="ticker" href="/stock/nuva#NASDAQ">NUVA</a>).

Rydex S&amp;P Equal Weight Health Care (NYSE: <a class="ticker" href="/stock/ryh#NYSE">RYH</a>) is up nearly 17% since the beginning of the year. The fund uses a passive management strategy to track the performance of the underlying index. Top holdings include Cephalon (NASDAQ: <a class="ticker" href="/stock/ceph#NASDAQ">CEPH</a>), MedcoHealth Solutions (NYSE: <a class="ticker" href="/stock/mhs#NYSE">MHS</a>) and Biogen Idec (NASDAQ: <a class="ticker" href="/stock/biib#NASDAQ">BIIB</a>).

iShares Nasdaq Biotechnology (NASDAQ: <a class="ticker" href="/stock/ibb#NASDAQ">IBB</a>) is up more than 14% year to date. The fund normally invests at least 90% of assets in securities of Nasdaq-listed companies that are classified as either biotechnology or pharmaceuticals. Top holdings include Amgen (NASDAQ: <a class="ticker" href="/stock/amgn#NASDAQ">AMGN</a>), Teva Pharmaceutical (NASDAQ: <a class="ticker" href="/stock/teva#NASDAQ">TEVA</a>) and Celgene (NASDAQ: <a class="ticker" href="/stock/teva#NASDAQ">CELG</a>).

Vanguard Health Care ETF (NYSE: <a class="ticker" href="/stock/vht#NYSE">VHT</a>) is about 14% higher than at the beginning of the year. The fund invests substantially all of its assets in the stocks that make up the MSCI U.S. Investable Market Health Care 25/50 Index. Top holdings include Johnson &amp; Johnson (NYSE: <a class="ticker" href="/stock/jnj#NYSE">JNJ</a>), Pfizer (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>) and Merck (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>).

iShares S&amp;P Global Healthcare Sector Index Fund (NYSE: <a class="ticker" href="/stock/ixj#NYSE">IXJ</a>) is up nearly 14% year to date. The fund generally invests at least 90% of its assets in securities of health care providers, biotechnology companies and manufacturers of medical supplies, advanced medical devices and pharmaceuticals. Top holdings include Johnson &amp; Johnson (NYSE: <a class="ticker" href="/stock/jnj#NYSE">JNJ</a>), Pfizer (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>) and Merck (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>).

PowerShares Dynamic Pharmaceuticals (NYSE: <a class="ticker" href="/stock/pjp#NYSE">PJP</a>) is up nearly 14% year to date. The investment seeks to replicate the Dynamic Pharmaceuticals Intellidex index, which includes companies engaged in the research, development, manufacture, sale or distribution of pharmaceuticals and drugs of all types. Top holdings include Eli Lilly (NYSE: <a class="ticker" href="/stock/lly#NYSE">LLY</a>), Merck (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>) and Amgen (NASDAQ: <a class="ticker" href="/stock/amgn#NASDAQ">AMGN</a>). 

iShares Dow Jones U.S. Healthcare (NYSE: <a class="ticker" href="/stock/iyh#NYSE">IYH</a>) is nearly 14% higher than at the beginning of year. The fund invests at least 90% of its assets in securities of health care equipment and services, pharmaceutical and biotechnology companies. Top holdings include Johnson &amp; Johnson (NYSE: <a class="ticker" href="/stock/jnj#NYSE">JNJ</a>), Pfizer (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>) and Merck (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>).

SPDR S&amp;P Pharmaceuticals (NYSE: <a class="ticker" href="/stock/xph#NYSE">XPH</a>) is up about 13% since the beginning of the year. The underlying index represents the pharmaceuticals subindustry portion of the S&amp;P Total Market index. Top holdings include Questcor Pharmaceuticals (NASDAQ: <a class="ticker" href="/stock/qcor#NASDAQ">QCOR</a>), VIVUS (NASDAQ: <a class="ticker" href="/stock/vvus#NASDAQ">VVUS</a>) and Valeant Pharmaceutical (NYSE: <a class="ticker" href="/stock/vrx#NYSE">VRX</a>).

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SPDR S&P Health Care Equipment

Overview

SPDR S&P Health Care Equipment (ARCA:XHE), Quote.Headers.trade-ideas